Another failure of rationality is failing to understand the difference between investment goods and consumption goods. A $745,000 house may cost more to buy than a $710,000 house but you’re also likely to be able to sell it for more as well. The “true” cost is not $35K, instead, it’s a complex calculation of marginal mortgage payments, expected rise or fall of housing prices and cash flow considerations.
I agree 100%. When I was house hunting, the number one priority (besides living in a good school district) was to buy a house which would be easy to turn around and sell if necessary.
If 95% of the houses in your town have 3+ bedrooms and 2+ bathrooms, you are arguably making a mistake if you save 5 or even 10 percent by buying a 2 bedroom house. Even if that’s all you need.
So the upshot is that people who want to be rational often need to factor in other peoples’ preferences, whether rational or not. As Ambrose Bierce pointed out, fashion is the dictator whom the wise both ridicule and obey.
I would say yes in the sense that you can probably learn more by reading other peoples thoughts carefully than by jumping in to post your own thoughts. But what if your main goal is to prove to yourself and others how smart you are? Or to win approval from others by posting intelligent points?
The best would be to do both reading and posting, I think. But like anything else, if you are pursuing multiple goals simultaneously, one can expect that sooner or later those goals are likely to come into conflict with eachother.
Another failure of rationality is failing to understand the difference between investment goods and consumption goods. A $745,000 house may cost more to buy than a $710,000 house but you’re also likely to be able to sell it for more as well. The “true” cost is not $35K, instead, it’s a complex calculation of marginal mortgage payments, expected rise or fall of housing prices and cash flow considerations.
I agree 100%. When I was house hunting, the number one priority (besides living in a good school district) was to buy a house which would be easy to turn around and sell if necessary.
If 95% of the houses in your town have 3+ bedrooms and 2+ bathrooms, you are arguably making a mistake if you save 5 or even 10 percent by buying a 2 bedroom house. Even if that’s all you need.
So the upshot is that people who want to be rational often need to factor in other peoples’ preferences, whether rational or not. As Ambrose Bierce pointed out, fashion is the dictator whom the wise both ridicule and obey.
If the your number one priority in finding a house is being able to easily sell it, you probably should rent rather than buy.
Why? In the right market, buying offers a lot of advantages over renting.
Is it also a failure of rationality when one doesn’t notice that someone else has already made all the points one’s making? :-)
I would say yes in the sense that you can probably learn more by reading other peoples thoughts carefully than by jumping in to post your own thoughts. But what if your main goal is to prove to yourself and others how smart you are? Or to win approval from others by posting intelligent points?
The best would be to do both reading and posting, I think. But like anything else, if you are pursuing multiple goals simultaneously, one can expect that sooner or later those goals are likely to come into conflict with eachother.