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To: Kary L. KrismerRegarding desperate selelrs.Sniglet posts about his job search in this thread. He also has a pod cast, which I plan to listen to hear his perspective, but I have not done so yet.Speaking in general, the unemployed person with insurance, in other words some pay, is a lot less desperate than the person with no pay, yet the both compete in the same market. As the unemployment benefits get closer to the end, the bargaining position of the unemployed person is less and less.Also note that the unemployment insurance allows a person to decline a much lower paying job, yet a job that pays near the old rate must be taken for continued unemployment insurance qualification. In other words, a low offer will probably be refused, at least initially, but as time goes on, expectations may change. The desire of the unemployed person to sell his or her services is very similar to the desire of the home seller to sell his or her home. If you find that perfect match right away, the unemployed is in great shape, but what are the chances of that? In a hot market the chances of finding an approximate match are much better than in a cold market.I was tracking a few of the automotive parts suppliers close up shop in Michigan. One had 400 employees. A few of those 400 found something new right away, but on the other side, a few might still be unemployed. It's about the same in housing. 400 new homes come on the market. A few sell right away, yet others linger on and on. If there is a problem, a good match is hard to find.When an offer comes in, one must always ask if the NPV to decline is positive. There are some who will always take the sure thing, even at the expense of a possible big benefit. Finding a much better position could pay off, if it is found. Is it worth the risk.That brings up another thing that is very interesting. Risk tolerance.If I offer you $100 or 50/50 at $200, which would you take?If I offer you $10,000, of $2^n where n is the number of fair coin flips until a head shows up, which would you take?In other words, if the first toss is heads, you get $2.If the first toss is tails, but the second toss is heads, you get $4If the first and second toss are both tails, but the third toss is heads, you get $8and so on.In the second example, I am yet to find a single unknowing person take the $2^n coin toss option. In fact, many knowing people would rather take the $10,000, yet clearly an unbounded opportunity has a much greater than $10,000 expected value.Why is it so many people want the $10,000 when the expected payoff is much higher going with the coin tosses?For those who want the expected value computation of the coin toss option:On the first toss there is a 50% that the game ends, and a 50% that it continues.The same is true on every individual toss, as coins do not have memory, but the chances of stopping on a given level are 1:2^n (1/2 the first round, 1/4 the second round, 1/8 the third round )Expected value:$2 * 1/2 + $4 * 1/4 + $8 * 1/8 + =$1+$1+$1+ = $oo($infinite)Note that 1/2+1/4+1/8+ = 100% Rate this comment: 0 0
By: | Sep 27, 2013 | Report Comment
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Jonathan_V | Region 4
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