By “subject” I take it to mean that people’s valuations depend (to some extent) on their knowledge of the market price.

Yes, that is how I intended it.

It’s confusing because it makes it seem like my valuation of the mug changed when my perception of its market price changed. But it’s simply the case that a different situation was used. In the first situation there was a disparity between my valuation and the market price. In the second situation there wasn’t.

You can have a valuation without knowledge of a market price. The important point to me is that what you call ‘valuation’ could be construed to be a very personal concept, but the fact that it is dominated by market price kind of questions that. In short: you’d need to be crazy to value (as in place a ‘valuation’) on something above the market price.

One thing to consider is that the market price most likely reflects the scarcity/importance of the book itself, rather than the information that it contains.

For sure: market price is largely determined by supply and demand.

In the first situation you’re probably going to be solely concerned with the importance of the book itself, rather than its information. But in the second situation there is no physical copy of the book so you’ll be solely concerned with the importance of its information. It stands to reason that your valuation will be different in both situations.

They’re really two different things, providing utility in different ways.

In the second situation will your knowledge of society’s valuation of the Wealth of Nations (its information) have any influence on your valuation of it?

Certainly. The mug problem is not limited to the selling of it. The mug might be worth $1 to me, but when I learn that its market price is $0.50 my valuation will drop at once. I might be willing to pay $0.20 to have Kindle access to TWON, but if I learn it’s available for free, that will be my valuation.

Let’s say that society’s valuation of the book is higher than society’s valuation of any other book on AKU. Will this knowledge have any influence on your own valuation of the book? Will you be willing to spend more of your subscription dollars on it simply because you know that it’s the most socially important book on AKU?

No, and it shouldn’t (unless for some reason I derive utility from other things than accessing the book.

Actually, if it was the #1 book on AKU by a healthy margin then I might consider using my subscription dollars to improve the ranking of books that I perceived were too lowly ranked.

Why would you do that? Their ranking is based on the preferences of everyone. What would you hope to achieve by improving its ranking? I think part of the problem here is that the price paid for an item is seen as a proxy for the demand for an additional item (or in the case of TWON a similar item). Such linearity doesn’t always exist: our desire or demand for many goods and services is discrete. When we have enough, the price we are prepared to pay for the last item we purchased does not indicate an intention to purchase more.

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Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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