Opportunity Cost - always useful when analyzing new projects, new purchases, new hires, etc.
Price Elasticity - pure geeky economic term, but it really describes supply and demand in a mathematical model.
Joris
11 Apr 06
I love all of the above but: the Law of Diminishing Returns is also nice. Thats the one that keeps me thinking that it can be disproved using the internets.
Jonathan M
11 Apr 06
My biggest sunk cost is what my wife spends on clothes, shoes, and makeups. They are totally price inelastic and have a huge opportunity cost.
Jonathan M
11 Apr 06
… and my wife would give me a perplex look whenever I am using the law of diminishing returns on her 100th pair of shoes…sign
Three economists went out hunting, and came across a large deer. The first economist shoots, but misses by 20 ft to the left. The second economist shoots, but also misses, by 20 ft to the right. The third economist shouts, “I got it!”
Diminishing marginal returns definitely gets my top vote, but I also have a special place in my heart the incompatible triangle of monetary econ.
You’re familiar with the software development adage: “schedule, budget and features: pick two.” In monetary economics its “fixed exchange rate, free movement of capital, and ability to control your monetary policy (to do things like control inflation): pick two”
Drew Pickard
11 Apr 06
Well, Sunk Cost makes me feel good that I didn’t go to that Mogwai show I had a ticket for.
sort of
Matt White
11 Apr 06
Mine is marginal utility. It explains individual behavior very well in a lot of circumstances.
“Opportunity cost” is a great one, and salient to much of the “Get Real” philosophy, as the welcome constraints often force you to choose an opportunity and let go of many others.
I don’t think I’m alone in this culture in often wishing I can choose something and at the same time not forego the alternatives, have my cake and eat it too.
Sunk cost is definitely my favorite. As a sysadmin I see a lot of good decisions get dragged down by considering sunk costs as waste. So in order to not “waste” the investment of time or money groups plod on and try to salvage their projects and systems, when the time could be spent on things that better meet their needs from the ground up.
Diminishing marginal returns is also cool.
nursegirl
11 Apr 06
After reading Bob’s comment, and noticing that the “Backpack calendar coming soon” notice is no longer on my backpack account, I’m wondering if you have anything you’ll be announcing soon.
I’ve been so excited for the possibility of this calendar…
Yeah my favourite is sunk costs as well, if only because the ability to actually abide by it without thinking about it is almost impossible to cultivate. Believe me, I’ve tried! Whether you’re thinking “Should I continue waiting for the train or go upstairs and get a cab?” or “Do I continue with this project despite the fact its flaws are becoming more obvious by the day, morale is at a low and no one will give damn if we do ever finish it?”, the first voice you hear will always be “But you’ve waited so long already!” and “But we’ve already put all this work in!”.
I know now I’ll never be able to not have those thoughts, the trick is just to acknowledge them, but then be sure to dismiss them.
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Oh NOOO, I’ve become one of those losers that hit the post button 3 times.
Sorry *^-^*
David
18 Apr 06
How about a Subgame perfect equilibrium: in game theory, an equilibrium such that players’ strategies constitute a Nash equilibrium in every subgame of the original game. Information asymmetries are kinda cool, too.
Chuck
19 Apr 06
Go figure a blog on IT that discusses econ, I love it. My favorite is diseconomy of scale, the opposite of economy of scale, where each dollar invested cost you more than you get back. Tom Peters dsicusses some of this in a book titled, “You Can’t Shrink Yourself to Success”. A bit longwinded but a concept for much of the excess in corporate culture.
Nigel
17 Aug 06
Externality is my favourite - the hard to measure effects on third parties of transactions, such as pollution or hidden benefits.
Nigel
17 Aug 06
Externality is my favourite - the hard to measure effects on third parties of transactions, such as pollution or hidden benefits.
42 comments so far (Jump to latest)
Don Drake 11 Apr 06
I have 2:
Opportunity Cost - always useful when analyzing new projects, new purchases, new hires, etc.
Price Elasticity - pure geeky economic term, but it really describes supply and demand in a mathematical model.
Joris 11 Apr 06
I love all of the above but: the Law of Diminishing Returns is also nice. Thats the one that keeps me thinking that it can be disproved using the internets.
Jonathan M 11 Apr 06
My biggest sunk cost is what my wife spends on clothes, shoes, and makeups. They are totally price inelastic and have a huge opportunity cost.
Jonathan M 11 Apr 06
… and my wife would give me a perplex look whenever I am using the law of diminishing returns on her 100th pair of shoes…sign
Mark 11 Apr 06
Would probably be the learning/experience curve. It is, at it’s core, a great reason to appreciate your employees and treat them well.
The more your turnover rate creeps up, the more of an impact learning curves will have on your business…
Dan Boland 11 Apr 06
I hate to sound like a copycat, but the Law of Diminishing Returns and Opportunity Cost are two that I notice numerous times on a daily basis.
Carlo 11 Apr 06
Comparative advantage.
Working to your comparative advantage ~= Do what you love
Tom Greenhaw 11 Apr 06
I’d have to go with the old law of supply and demand influencing price…
nate 11 Apr 06
Personally, I’m partial to the Law of Excluded Middle.
Oh wait, we’re talking economics…
Nevermind.
Not adding anything to the discussion 11 Apr 06
Three economists went out hunting, and came across a large deer. The first economist shoots, but misses by 20 ft to the left. The second economist shoots, but also misses, by 20 ft to the right. The third economist shouts, “I got it!”
Ryan Ripley 11 Apr 06
@Jonathan M
I’m pretty sure that wives and economics do not mix… :-) I think the general rule is:
happy wife = happy life
Sharaf Atakhanov 11 Apr 06
My favorite: Game Theory!
Ian Schuler 11 Apr 06
Diminishing marginal returns definitely gets my top vote, but I also have a special place in my heart the incompatible triangle of monetary econ.
You’re familiar with the software development adage: “schedule, budget and features: pick two.” In monetary economics its “fixed exchange rate, free movement of capital, and ability to control your monetary policy (to do things like control inflation): pick two”
Drew Pickard 11 Apr 06
Well, Sunk Cost makes me feel good that I didn’t go to that Mogwai show I had a ticket for.
sort of
Matt White 11 Apr 06
Mine is marginal utility. It explains individual behavior very well in a lot of circumstances.
Berserk 11 Apr 06
Leisure!
xian 11 Apr 06
“Opportunity cost” is a great one, and salient to much of the “Get Real” philosophy, as the welcome constraints often force you to choose an opportunity and let go of many others.
I don’t think I’m alone in this culture in often wishing I can choose something and at the same time not forego the alternatives, have my cake and eat it too.
Bob 11 Apr 06
Sunk cost is definitely my favorite. As a sysadmin I see a lot of good decisions get dragged down by considering sunk costs as waste. So in order to not “waste” the investment of time or money groups plod on and try to salvage their projects and systems, when the time could be spent on things that better meet their needs from the ground up.
Diminishing marginal returns is also cool.
nursegirl 11 Apr 06
After reading Bob’s comment, and noticing that the “Backpack calendar coming soon” notice is no longer on my backpack account, I’m wondering if you have anything you’ll be announcing soon.
I’ve been so excited for the possibility of this calendar…
Peter Fitzgibbons 11 Apr 06
I LOVE the reference to the “Concorde Effect” at the end of the W article. I never new that about the Concorde project!
Wayne 11 Apr 06
If we’re talking behavorial economics my pick is choice overload.
scott brooks 11 Apr 06
This is my alltime favorite.
“Parkinson’s Law,” - work expands so as to fill the time available for its completion.”
http://en.wikipedia.org/wiki/Parkinson%27s_Law
I had a economics prof back in university who said if you are going to understand one thing about this course learn this.
Especially useful if you have your own company or your own product ….or have to deal with your local bureaucrat.
IT goes against the 37sig law that less is more sort of ….
cheers
scott
Pascal Pensa 11 Apr 06
+1 for comparative advantage.
Maxine Sherrin 12 Apr 06
Yeah my favourite is sunk costs as well, if only because the ability to actually abide by it without thinking about it is almost impossible to cultivate. Believe me, I’ve tried! Whether you’re thinking “Should I continue waiting for the train or go upstairs and get a cab?” or “Do I continue with this project despite the fact its flaws are becoming more obvious by the day, morale is at a low and no one will give damn if we do ever finish it?”, the first voice you hear will always be “But you’ve waited so long already!” and “But we’ve already put all this work in!”.
I know now I’ll never be able to not have those thoughts, the trick is just to acknowledge them, but then be sure to dismiss them.
Michael Ward 12 Apr 06
I think I just had an epiphany. The sunk costs idea could seriously alter my perspective on life.
Jason Liebe 12 Apr 06
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Cheers.
Jason Liebe 12 Apr 06
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Cheers.
Jason Liebe 12 Apr 06
Price Elasticity of Demand is my favorite. I owned a candle company for a while and that was a good thing to play with.
If anyone saw the apprentice a couple nights ago you could have witnessed a fine example of PED. One team had their prodcuct at $7.99 the other at $4. $4 team won by 300%. Of course I’m simplifying things…
Sunk cost is my least favorite Econ precept being a serial entrepeneur… That and SHIRKING :-)
Cheers.
Jason Liebe 12 Apr 06
Oh NOOO, I’ve become one of those losers that hit the post button 3 times.
Sorry *^-^*
David 18 Apr 06
How about a Subgame perfect equilibrium: in game theory, an equilibrium such that players’ strategies constitute a Nash equilibrium in every subgame of the original game. Information asymmetries are kinda cool, too.
Chuck 19 Apr 06
Go figure a blog on IT that discusses econ, I love it. My favorite is diseconomy of scale, the opposite of economy of scale, where each dollar invested cost you more than you get back. Tom Peters dsicusses some of this in a book titled, “You Can’t Shrink Yourself to Success”. A bit longwinded but a concept for much of the excess in corporate culture.
Nigel 17 Aug 06
Externality is my favourite - the hard to measure effects on third parties of transactions, such as pollution or hidden benefits.
Nigel 17 Aug 06
Externality is my favourite - the hard to measure effects on third parties of transactions, such as pollution or hidden benefits.