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Are we obligated to compensate for the irrationality of others?

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Clockwork
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In a perfect world an interaction would occur between two people like so:

One informed, rational person agrees to make a trade with another informed, rational person to their mutual advantage.

The world isn't perfect though, and sometimes several of the above traits aren't included in transactions. I'm wondering what is proper for a person to do in these situations where something is missing.

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Situation 1: The other person is not informed.

You are painter and a man approaches you to paint two rooms in his house. You are about to say that you'll paint the rooms in his house for $100 each for a total of $200, a fair price, when he says that he'll give you $600 to paint the rooms. You're obviously the first person he's been to and that he has not researched at all. You know the price he's offering you is far more than the work is normally worth and that he could get a much better deal. Are you obligated to inform him or, because he feels that he is gaining value from the transaction and you are as well, is it fair game to agree and do the job without saying anything further and shouldn't feel bad about it?

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Situation 2: The other person is not rational.

It is rumored that a very expensive flu medication that cures pig flu instantly works on humans as well. You know this to be false because you've been made aware of several studies disproving it and several people who have bought the flu medication at your pet supply store have had no results from the medicine. A man comes in and asks for the medication. As you go to get a bottle he mentions that he's getting it for his wife, who has the flu, and that he's seen all of the studies that show that it doesn't work, but thinks he'll get it for her anyway because he wants her to get over the flu as quickly as possible. Are you obligated to try to persuade him NOT to buy it? If you do and he still wants is, should you refuse to sell it to him because you know he is simply wasting his money?

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Situation 3: It is not to mutual benefit.

You are approached by someone offering a free month trial service for their product, with an added catch - they will give you a free $100 gift card to a store you frequently shop at if you agree to the trial. You know that their plan is for you to agree and then not cancel before the end of the month either through laziness or guilt from reciprocity, and they'll make their money back based on the following months where you will be paying for the service. You aren't interested in the service and you know that you'll cancel before the month is over, but you do want the gift card. Knowing this, is it wrong to agree to the trial for the gift card and then cancel the next day, never paying for the service but abiding by the contract and taking the free card?

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Situation 4: A reversed scenario.

Suppose you are the person on the other end of the deal and you are either poorly informed, irrational, or agreeing to something that is not to your mutual benefit. The situation doesn't turn out to your satisfaction in the end (You find out you could have paid less, you realize that what you predicted isn't realistic, or you wasted money on a deal that didn't turn out how you wanted it to), do you have a right to be angry at the other person for accepting into the deal, or is the fault yours?

I suppose my real question underlying all of this is "Is it wrong for a rational person to make deals skewed to their advantage due to the other party's irrationality?" and "Is a rational person obligated to try and correct another party's irrationality during an interaction?" because if one limits themselves to only interacting with other rational people the world would get pretty small.

I look forward to your responses because I'm genuinely puzzled!

- Clockwork

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Situation 1: The other person is not informed.
If we assume that you have a moral commitment to truth, you are morally obligated to correct the customer's mistaken impression. That is true of technical matters (e.g. "that kind of paint won't stick to that surface") probably to the point of being a legal duty, and would be true at the personal moral level of significant information about "the going rate". This is an instance of "the Trader Principle".
Situation 2: The other person is not rational.
You have told him that the stuff does not work on people, and you have no obligation to further pursuade him that he is being irrational.
Situation 3: It is not to mutual benefit.
You are describing a gift: is it moral to accept two free gifts, or to accept both but then decline the second. It sounds to me like you're accepting a gift which is contingent on something -- accepting gift 1. Then to morally accept gift 2, you must accept gift 1, not pretend to accept and then reject it.
Situation 4: A reversed scenario.
You have a right to be angry, and also to pay up. This can't be the reverse of the previous because there the donor offered a scond gift as long as you accept the first gift. What would be the reverse of that -- a guy say "Hey, I've got a great deal for you, you give me $100 for free, and to sweeten the deal you give me $75 just for accepting the gift". Suppose ATT offers you a new Iphone plus 4 month's service after 2 weeks, if you just give them $25 now. They take the money and next day say "Sorry, we're cancelling the contract, no refunds". You don't need to get mad, you need to get a lawyer.

OTOH given what you described, you should be angry with yourself for being stupid. You have to distinguish you being stupid from the other guy being dishonest.

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If we assume that you have a moral commitment to truth, you are morally obligated to correct the customer's mistaken impression. That is true of technical matters (e.g. "that kind of paint won't stick to that surface") probably to the point of being a legal duty, and would be true at the personal moral level of significant information about "the going rate". This is an instance of "the Trader Principle".

Is arbitrage therefore immoral, due to the discrepancy in price?

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Is arbitrage therefore immoral, due to the discrepancy in price?
I don't see how it would be. One party is not being dishonest and the context is completely different -- with arbitage, the parties know what they are doing (even if they don't have exactly the same knowledge, they know that they are essentially gambling on knowledge, not getting a room painted).
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I suppose my real question underlying all of this is "Is it wrong for a rational person to make deals skewed to their advantage due to the other party's irrationality?" and "Is a rational person obligated to try and correct another party's irrationality during an interaction?"

There is nothing wrong with taking advantage of the irrationality(*) of others, but there is nothing especially virtuous about it, either. That is to say, one should not pursue it as a career ; a man who relies on it as his primary way of making a living is not living qua man. It would not be right to depend on irrationality as your primary source of values and means of survival; such a career would turn reason into your enemy and you into an enemy of reason.

However, if your primary pursuit is a first-handed, rational productive activity, and the advantages you obtain from irrational people are merely incidental circumstances that help you along the way, then I see no problem with that.

To give an example from The Fountainhead: the Wynand papers catered to irrationality, so it was wrong for Gail Wynand to build his entire career on that. On the other hand, the fact that Roark accepted the money that Wynand earned mostly from the revenues of these papers neither added to Roark's virtue nor detracted from it; the important thing is that he used it to create the Wynand Building, and that was an act of virtue. Wynand describes the money as a fertilizer for Roark's career, which is really a metaphor that says it all. The irrationality of others can get you some dung, which you can use as an aid in growing your food--but you cannot use it as a replacement of your food.

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(*) Not being well-informed is, of course, something entirely different from irrationality. I only address the latter here.

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There is nothing wrong with taking advantage of the irrationality(*) of others, but there is nothing especially virtuous about it, either. That is to say, one should not pursue it as a career ; a man who relies on it as his primary way of making a living is not living qua man. It would not be right to depend on irrationality as your primary source of values and means of survival; such a career would turn reason into your enemy and you into an enemy of reason.

However, if your primary pursuit is a first-handed, rational productive activity, and the advantages you obtain from irrational people are merely incidental circumstances that help you along the way, then I see no problem with that.

This is pretty much how i see it, and i remember uttering something similar in the topic whether running a gambling establishment is moral.

Consider these examples:

1) I become a tele-evangelist, and start preaching lies as truth to vulnerable, irrational people. I start writing books, going on tours around the world, and making a lot of money by lying to people. This is clearly immoral, as im basing my livelyhood on other people being irrational

2) I am an expert in kitchen knives, and start up a store selling them. My customers mainly consist of people who want to slice their bread or filé their fish more efficiently, but the occasional nutjob will buy my knives to stab his children. There is really no way of me distinguishing between who is who, so i sell to everyone who wants to buy one. Moral, because i have no knowledge of who will stab their children and who will just slice their bread.

3) I am a pharmacist, and my customers mainly consist of people who want cures to their diseases and ailments. There will also be people who want to get high on these drugs. If i see a person that acts suspicious, and behaves erratically, i will not sell a strong drug to him without a prescription, and not only for the reasons that i want to uphold my stores reputation, or that i fear that he may hurt someone i love after getting high on that drug. The reason i will not sell, is because i do not want to knowingly do business with irrational people, and i do not want to get monetary "benefits" from such a transaction.

However, there is no need to start doing background checks, and refuse respectable looking clients to buy whatever they want even without a prescription, but i think i would tell my employees not to do business knowingly with junkies.

4) Whatever profession that has no irrational customers

So, example 1 is a business where i base my whole business on the irrationality of others. There are more or less no rational customers of my books, and the only exception is maybe the ones buying my books to refute my nonsense. Example 2 is a business where i will have some irrational customers, but there is no way of distinguishing between them and the majority of my customers that are rational. Example 3 is a business where i will have rational and irrational customers, but i do have some way of diagnosing the two. Example 4 is a theoretical business where all my customers are rational.

I think that the moral way is to not take any efforts that cause more harm to you than good, by refusing to sell to people who will use my products for irrational uses. By this i mean things like requiring prescriptions if you are a pharmacist, or requiring mental health statements from knife buyers. But if you can distinguish between the irrationals and the rationals then you should refuse to do business with the ones who will use your product for irrational uses.

Obviously this doesnt mean that you shouldnt do business with irrational people, and it just means that you shouldnt do business with people who do business with you for irrational reasons. Renting an apartment to a person who pays for it with welfare is not immoral, but selling your legal services to a person who wants advice on how to get welfare is.

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Situation 1: The other person is not informed.

You are painter and a man approaches you to paint two rooms in his house. You are about to say that you'll paint the rooms in his house for $100 each for a total of $200, a fair price, when he says that he'll give you $600 to paint the rooms. You're obviously the first person he's been to and that he has not researched at all. You know the price he's offering you is far more than the work is normally worth and that he could get a much better deal. Are you obligated to inform him or, because he feels that he is gaining value from the transaction and you are as well, is it fair game to agree and do the job without saying anything further and shouldn't feel bad about it?

I'll take a different tack than Dave on this one. I don't think there is anything wrong with accepting his offer. Price is about value, and value is not intrinsic. The man has told you what he values the work at, and the competitive "going rate" is only relevant if he wishes to pursue a competitive situation farther.

That said, a lot also depends on the context of your relationship, and the potential damage to you if he does find out after the fact that the going rate is higher, and whether you think he'll be upset later (although he has no right to be).

But that said, if it was a one-off job, and the man approached me, then I'd say sure, and I'd make sure I did a bang-up job, maybe even throw in a little extra work so that he is well satisfied with the work.

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I'll take a different tack than Dave on this one. I don't think there is anything wrong with accepting his offer. Price is about value, and value is not intrinsic. The man has told you what he values the work at, and the competitive "going rate" is only relevant if he wishes to pursue a competitive situation farther.

That said, a lot also depends on the context of your relationship, and the potential damage to you if he does find out after the fact that the going rate is higher, and whether you think he'll be upset later (although he has no right to be).

But that said, if it was a one-off job, and the man approached me, then I'd say sure, and I'd make sure I did a bang-up job, maybe even throw in a little extra work so that he is well satisfied with the work.

I agree with this. In economics, they use a comparative advantage model to establish a range under which two participants may trade to mutual benefit. To me, this example was just in the higher range for myself, while the guy for all I know could have been willing to pay a higher price (and obviously wouldn't mind paying a lower price).

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I've been thinking a bit about this after reading your answers. I'm trying to form a concept that addresses issues like these and accommodates the following seemingly conflicting points:

1. A rational man is responsible for being honest and rational in his interactions.

2. A rational man is not responsible for ensuring that everyone else acts rationally.

The seeming conflict would come in when an irrational person would want to make a deal with our rational man. Imagine if a man came to Roark with the intention of hiring him to design an 8' by 6' shed. Roark thinks that it would be fun, but completely unnecessary, to design something as simple as a shed and knows that his design wouldn't add much to the shed when compared with a store-bought shed at the local Home Depot, the latter shed costing him notably less than a professionally designed shed. There are a few different endings that might violate one of the above points.

If the prospect was not informed or did not know he was making a bad decision concerning sheds, Roark would be possibly considered as deceiving him through omitting an obvious truth were he to simply agree to take the job.

If the prospect knew about the other sheds and didn't want them, it's not Roark's responsibility to try and convince him to act rationally.

If Roark refuses the commission, he's not acting in his own self interests if he wants to provide his designs and services where they are desired.

How about this though - If Roark simply said "You should probably do some more research on sheds before you make a decision, but if you'd like to hire me to design you one I'd be happy to take the job."

In that sense, he's being honest about the transaction by letting the prospect know that he might be doing something stupid, acting in his own self interest by saying he'd like to do the job, and he's not taking taking the other person's failure to be rational as an obligation on himself. He'd be making the other person aware of his error (being honest), but not going out of his way to solve it (being rational).

With this applied to my initial three scenarios, the answers would be as follows:

Situation 1: The other person is not informed.

You are painter and a man approaches you to paint two rooms in his house. You are about to say that you'll paint the rooms in his house for $100 each for a total of $200, a fair price, when he says that he'll give you $600 to paint the rooms. You're obviously the first person he's been to and that he has not researched at all. You know the price he's offering you is far more than the work is normally worth and that he could get a much better deal. Are you obligated to inform him or, because he feels that he is gaining value from the transaction and you are as well, is it fair game to agree and do the job without saying anything further and shouldn't feel bad about it?

"You may not be as informed on painting services as you should be, but if you'd like to pay me $600 to paint the two rooms I'd be happy to."

Situation 2: The other person is not rational.

It is rumored that a very expensive flu medication that cures pig flu instantly works on humans as well. You know this to be false because you've been made aware of several studies disproving it and several people who have bought the flu medication at your pet supply store have had no results from the medicine. A man comes in and asks for the medication. As you go to get a bottle he mentions that he's getting it for his wife, who has the flu, and that he's seen all of the studies that show that it doesn't work, but thinks he'll get it for her anyway because he wants her to get over the flu as quickly as possible. Are you obligated to try to persuade him NOT to buy it? If you do and he still wants is, should you refuse to sell it to him because you know he is simply wasting his money?

"Studies have shown that this doesn't work on humans, but if you want to buy it I'll sell it to you. Be aware that once it's been opened it cannot be returned."

Situation 3: It is not to mutual benefit.

You are approached by someone offering a free month trial service for their product, with an added catch - they will give you a free $100 gift card to a store you frequently shop at if you agree to the trial. You know that their plan is for you to agree and then not cancel before the end of the month either through laziness or guilt from reciprocity, and they'll make their money back based on the following months where you will be paying for the service. You aren't interested in the service and you know that you'll cancel before the month is over, but you do want the gift card. Knowing this, is it wrong to agree to the trial for the gift card and then cancel the next day, never paying for the service but abiding by the contract and taking the free card?

"I don't think that I'll continue to purchase your product after the free trial. With that being said, if you're offering this deal I'd be happy to sign up."

What do you guys think?

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The issue here is one of information. In "acting rationally" am I obligated to provide the other party in the trade information that they do not have? I think the answer to this is a general no. I can also think of contexts in which it actually is in my self-interest to provide the information, however, in which case, acting rationally is to provide the information. But outside of those contexts such an obligatin does not exist.

To some people this feels like fraud, but the existence of assymetries of information is not fraudulent in and of themselves, and so I can't see where you'd be under any obligation to remove the assymetries.

Misrepresenting the facts is fraud. Not telling someone the risks of use of your product (if it isn't generally known) is possible fraud, but negotiating price is NOT fraudulent in and of itself.

Beyond that, it's caveat emptor.

I think part of what we confuse intuitively (maybe it's all that altruism floating around) is the difference between someone coming to you and asking "What should I value this thing for?" and "I value this for X. Will you do it for that?" They are two totally different things, but many times we mistake the second for the first.

Edited by KendallJ
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In "acting rationally" am I obligated to provide the other party in the trade information that they do not have? I think the answer to this is a general no.

...

Misrepresenting the facts is fraud. Not telling someone the risks of use of your product (if it isn't generally known) is possible fraud, but negotiating price is NOT fraudulent in and of itself.

Beyond that, it's caveat emptor.

I think you're failing to distinguish good versus bad (virtue vs. the other thing), as opposed to properly legal vs. illegal. An obvious distinction of that nature is theft vs. drug use. Just as drug use should be legal even though it is immoral, seeking the unearned (through legally permissible dishonesty) should be legal even though it is immoral. As CF said, there is nothing especially virtuous about it. In fact, there is nothing at all virtuous about it. When a man -- in the painting profession -- assesses a job and in light of those facts determines "The nature of this job is such that it's value to me is X", that is a statement about his value system, and his objective evaluation of what the job is equal to. His value system is not whimsically determined by what other people say, like "I don't want to spend more than Y". He may negotiate down to something like Y because of demand, but other people's values do not replace his values.

My problem is with a man not being honest about his values. If his estimation of the objective worth of his work (considering how good / bad he is as a painter, the size of the room etc) is that the value of what he has to offer is X, then he should not seek a substantial multiple of X which he will not have earned by his actions. I don't take the Trader Principle to just refer to the initiation of or dependence on force (via government regulation), I take it to mean that a man can actually assess the value of things, and say "This thing is worth X".

Maybe the root question here is whether "objective value" is a valid concept.

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David, by this reckoning, then it would be immoral to walk into a department store and pay the asking price simply because you value something more than what they ask.

This isn't an issue of objective value. Nor is it one of legal vs. illegal. The question again, is even if I value something at X, am I then obligated to reveal my value preferences to the other person in a trade. No. Assymetry of information is not dishonesty. Fraud is the misreprentation of the facts of reality. We are simply talking about the disclosure of some of those facts (namely in the realm of value). The non-disclosure of some relevant facts (i.e. safety issues) could be considered fraud, but value preference ain't one of em.

If A is willing to offer service for $200 and B is willing to pay $400, what is the price at which a transaction will occur. Well, anything between $200-$400. There is no obligation for either party to divulge their value preferences.

The basic business ideas of price discrimination, and segmented marketing are based upon these concepts.

Edited by KendallJ
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Kendall, you just HAD to go and upset my mental applecart by making a point like you did in your last post. Jerkface!

More fun! Bigbutt!

It gets interesting when you try to consider various senarios. For instance, if David's concept of objective value is true, what is the morality of an asking price of a product offered by a corporation instead of an individual? Can a corporation value at one single objective value point? If not, then why is the transaction somehow limited if we're talking about 1 person (say an apple vendor in a market) but not when we talk about corporate products?

Plus, I'm a marketer by profession. David just suggested most of what I do is dishonest, when I'm quite sure it's not (and not because I have the cover of a corporation either)

Edited by KendallJ
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Having been in sales for about 25 years, I have to agree with Kendall that the objective economic value of something is the price you are willing and able to pay for it given your context of knowledge at the time of the transaction. The seller is not at all obligated to correct the views of the purchaser, such as telling him that if he goes somewhere else he can get it for less; all he is obligated to do to be open and honest about the transaction is to tell the truth about the nature of the products or services; state his price, and then let the customer decide if he wants it at that price or not.

The motto of a good salesman is: What the market will bare! and he knows that "the market" is that particular sale that he is making. I routinely give some customers a discount, if they ask for it or if they are about to walk out the door without purchasing the product or service, but if they don't ask for one, I generally do not offer it. Is this fair, rational, and honest? Your damned straight it is! If I calculate out a price of, say, $150 for a framing job, and the customer wants to pay me more, I'll take it! The price is the agreed upon transaction customer to customer.

Now, after saying that, I do understand that it is in our long-term interest to beat our competitors, if we can, for every single customer. But some of our customers are so satisfied, they don't ask for a discount; others always want a discount. We sell to the customer and that customer is the market. It is not as if there is some floating abstraction out there called "the market" that we have to satisfy -- we have to satisfy our individual customer, and that is all we have to satisfy.

Look at it this way, some people pay to keep this website open, while others don't. yet they are all granted access to this website and permission to post (within guideline limits). Is it unfair that some pay and that others don't? No, it is not, because they have chosen to pay for it. I don't think it would be unfair to say that the first few months are free, but then after one must pay a minimum of $10 per year to participate. And I am debating with myself if I ought to become a patron or not; though I'm not sure what additional benefits I would be getting out of being a patron.

In short, fair, honest, and rational means you deciding, based on your standards and context, what you think a product or a service is worth to you.

Do I think it is worth paying an additional $25-$50 per month for high speed Internet access, even though I know it would better for cruising around on the Internet? I have decided no to that, though I am talking advantage of a marketing package that will get me from dial-up to high speed at the same price I am paying now for phone and Internet service -- it won't cost me more than I am paying now, so why not switch? In a sense, could one say that high speed Internet was worth $50 per month? That was the "market price", but I decided it wasn't worth it -- so it wasn't tailored to me as the market.

There is no intrinsic price of any product or service -- there is only the price you are willing and able to pay.

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Situation 3: It is not to mutual benefit.

You are approached by someone offering a free month trial service for their product, with an added catch - they will give you a free $100 gift card to a store you frequently shop at if you agree to the trial. You know that their plan is for you to agree and then not cancel before the end of the month either through laziness or guilt from reciprocity, and they'll make their money back based on the following months where you will be paying for the service. You aren't interested in the service and you know that you'll cancel before the month is over, but you do want the gift card. Knowing this, is it wrong to agree to the trial for the gift card and then cancel the next day, never paying for the service but abiding by the contract and taking the free card?

I'm still finding my footing as an objectivist, but it seems to me you are behaving in your rational self-interest by taking the card and then cancelling the service.

Some people may desire the free service. Many people may unintentionally forget to cancel the free service. (Indeed, that is why the pitch is set up this way.) The trial-offerers have a full rational understanding of the consequences. They are saying:

1. Sign up for my trial/product/service and I'll give you something free.

2. You are free to cancel the service at any time.

3. After 30 days, you will be billed for the service.

By signing the contract, you and the offerer are agreeing to all three terms. Nowhere are you agreeing, explicitly or implicitly, "I am interested in this service" or "I desire this service in the long term" or "I fully expect to pay for this service". Nobody is using force, and nobody is committing fraud. The company may hope you will forget to cancel, but you are not signing to forget, nor are you morally bound by anyone (or any company's) hopes.

For many of the people working these types of things, the number of people that sign up IS the value to them. They personally may more commission when more people sign up!

Of course, if everyone was Objectivist, these types of marketing schemes would fail, and would stop being offered. I like to think of them as evidence of irrationality in the world.

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Situation 1: The other person is not informed.

You are painter and a man approaches you to paint two rooms in his house. You are about to say that you'll paint the rooms in his house for $100 each for a total of $200, a fair price, when he says that he'll give you $600 to paint the rooms. You're obviously the first person he's been to and that he has not researched at all. You know the price he's offering you is far more than the work is normally worth and that he could get a much better deal. Are you obligated to inform him or, because he feels that he is gaining value from the transaction and you are as well, is it fair game to agree and do the job without saying anything further and shouldn't feel bad about it?

The question here is whether taking 3 times the actual price for the job is in your self interest. In the short term it is, of course, but what about the long term? House painters, architects, contractors, carpet cleaners and other such service providers rely a lot on word-of-mouth advertising. Let's say this splendid customer tells another ten people you did a grand job and what he paid for it. That could cost you ten more customers and that would loose you money in the long run.

On the other hand if this customer tells other people not only that you did a good job, but that you ahrged less that what he was willing to pay, you'll come accross as an honest businessman unwilling to take a penny more than the job is worth. That would make more people trust you, which would get you even more customers.

BTW, when hiring someone to do me a service, or buying goods, I never make a first offer unless I'm positive I know the going rates. To do otherwsie is foolish. I won't always shop around, but most often I do. It's only good sense.

Situation 3: It is not to mutual benefit.

You are approached by someone offering a free month trial service for their product, with an added catch - they will give you a free $100 gift card to a store you frequently shop at if you agree to the trial. You know that their plan is for you to agree and then not cancel before the end of the month either through laziness or guilt from reciprocity, and they'll make their money back based on the following months where you will be paying for the service. You aren't interested in the service and you know that you'll cancel before the month is over, but you do want the gift card. Knowing this, is it wrong to agree to the trial for the gift card and then cancel the next day, never paying for the service but abiding by the contract and taking the free card?

I personally, knwoing what I'm like, would take it but probably tell the seller exactly what I'd do (which is as you describe). I hate to see other people wasting effort and resources. But, yes, I'd take the offer and cancel it as soon as it was no longer to my benefit.

If I were the seller, I'd still want the prospect to take the offer even if he made it clear he would cancel and spend the gift card. Why? Because at least he'll try my product and it may change his mind. I'd be gambling for the chance to obtain a customer, in effect. I may win or I may loose, but it's my risk to take. Naturally I'd do a scheme like that only if I expected to get enough new customers to make it worthwhile. As I understand these type of plans ofte work on, say, 30% of the prospects. So that's the cost of doing that kind of business.

Situation 4: A reversed scenario.

Suppose you are the person on the other end of the deal and you are either poorly informed, irrational, or agreeing to something that is not to your mutual benefit. The situation doesn't turn out to your satisfaction in the end (You find out you could have paid less, you realize that what you predicted isn't realistic, or you wasted money on a deal that didn't turn out how you wanted it to), do you have a right to be angry at the other person for accepting into the deal, or is the fault yours?

It's your fault for not acting sensibly. Let's say you want to chanhe all 4 of your car's tires. What you should do is visit or call 3 or 4 tire places and find out what they charge and what they offer (some will offer free tire rotations for the life of the tires, for example). If, on the toher hand, you drive to the closest one and have the work done there, chances are you'll opverpay. You may also check prices around, then drive to amore expensie, but closer, tire dealer and ask for a lower price (sometimes it works, sometimes not; but it is worth trying).

You learn, you do it differently next time and you go on with your life.

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There is no obligation for either party to divulge their value preferences.
I think what I object to with this example is not so much the painter's dishonesty with the customer as his dishonesty with himself. He was lying to himself all along about the value he assigned to the job, and should not have pretended to himself that his price would be $200, it should have been $600, and he should not have been thinking in terms of $200. Perhaps he would be willing to negotiate downwards to $400 or $300 or who knows, even $200.

So here's a non-hypothetical. I edit a journal, and a subscriber sent in a check for a subscription, but he sent too much money. In fact I refunded the overpayment, but since he was willing to pay more, should I have just kept my mouth shut?

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So here's a non-hypothetical. I edit a journal, and a subscriber sent in a check for a subscription, but he sent too much money. In fact I refunded the overpayment, but since he was willing to pay more, should I have just kept my mouth shut?

No, you shouldn't. Overpayments like that are usually mistakes. Chances are good the subscriber would realize it and demand a refund. That's more of a hassle than correcting him in the first place would be.

Also, if you publish the subscription rates you should honor them regardless of other considerations. trust is an integral part of business, and the best way to earn and keep your customers' trust is by being honest at all times in your dealings with them. Published rates a re a promise of a price gurantee for a product or service, taking more money for them is dishonest, even if the customer made the mistake to begin with.

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I think what I object to with this example is not so much the painter's dishonesty with the customer as his dishonesty with himself. He was lying to himself all along about the value he assigned to the job, and should not have pretended to himself that his price would be $200, it should have been $600, and he should not have been thinking in terms of $200. Perhaps he would be willing to negotiate downwards to $400 or $300 or who knows, even $200.

It really depends on whether or not you have standard stated pricing or not. In other words, if he says he will paint a certain size room for $200, then it is in his best interest to stick with that pricing model, rather than doing it for $600 for one customer -- under ordinary circumstances. But what if he is booked up for the next month, and a potential client comes to him and says he needs his room painted by the weekend, because he is having a party and the room needs to be painted before then? The painter tells the customer that he would have to do some re-scheduling, and he's not sure he can do that, but if the client will pay $600, he'll see what he can do. If the client agrees with that, and the painter can re-schedule his previous appointments, then the new client is paying additional for services rendered.

Same thing with a publication. If you have stated prices, then it is in your best interest to charge that price to anyone wanting to buy the periodical. However, if someone claims that the price is too low, say for The Objective Standard, and insists on paying more for it, then the publishers are not being dishonest in accepting more money.

Let me put it this way. You routinely write essays for this forum, and you are not being paid for it (in money). What if someone told you they wanted to compile your writings and sell them in a booklet, and they would pay you $5,000 for them? You weren't charging before, and now someone wants to buy them off you, are you being dishonest if you accept the money? I don't think so. Similarly, I have a whole website (about 200 pages) of my writing in one place, and if someone wanted to publish them in a booklet form and pay me for it, I would accept (depending on the offer). I also have a novel in progress, and if someone came across it from one of my friends who may have a copy of it, and wanted to pay me an advance of, say, $50, 000 (negotiable, up or down) or so to complete it and give me a good deal on publishing it, why should I turn them down? Right now, it's just sitting in my closet, so is it worth anything or not? Well, it is worth what someone wants to pay me for it so long as I accept the payment. And the novel as well as my other writings belong to me and only to me at this time, so they can contact me if they want to negotiate with me.

One has to be careful not to be an intrinsicist when it comes to pricing. If K-Mart is selling wigget for $40 and Walmart is selling it for $35, is one price right and the other wrong? Not at all. The sticker price is just what the company wants for it; it doesn't mean they are going to make the sale. And, if someone is at K-Mart already, they might be willing to pay that extra $5 to save the time a driving all the way to Walmart.

So you cannot say there is a "right price" for the market -- when the product or the service is being sold in a range of prices from various vendors and all their customers are satisfied.

For custom framing, which I do, at least some of the price pays for my designing the end product; and some people are willing to pay more for my expertise versus some inexperienced high school guy at the competition. If I got famous some day and people wanted to pay me a lot extra because it is a Tom Miovas Design, why would I be dishonest to accept that money?

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In other words, if he says he will paint a certain size room for $200, then it is in his best interest to stick with that pricing model, rather than doing it for $600 for one customer -- under ordinary circumstances.
I agree, but I'm more focused at the moment on the painter's dishonesty, not whether he made a bad business choice.
But what if he is booked up for the next month, and a potential client comes to him and says he needs his room painted by the weekend, because he is having a party and the room needs to be painted before then?
But that's not in the hypothetical scenario. What we have is a painter who charges $100 for a room of that size (I don't know why the hypothetical involved two rooms at an actually unrealistic price), but because the customer spoke first, he disregards this fact and charges the guy $300 per room. If he was being presdented with a painting emergency, he would not have planned to get into this contract for $200, he would have in fact said "it will cost you $600".
However, if someone claims that the price is too low, say for The Objective Standard, and insists on paying more for it, then the publishers are not being dishonest in accepting more money.
Again, what I am objecting to is not that the customer pays too much, but that the seller is being dishonest by not honestly saying "This is what I customarily charge, but I'm happpy to receive more money". I object to the dishonesty of pretending that you charge $300 per room when in fact you charge $100. If the painter thought his painting was so superb, he would have been planning to say "I charge $300 per room", which would nicely match the customer's offer. But his price, which he was about to report to the customer, was in fact $100.
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The problem sounds, to me, like a confusion between the nature of posted prices and non-posted prices. The painters price was posted in his own head based on his usual rate, so DavidOdden might suggest that a comparable scenario would be if he owned a publication with posted prices that he'd taken down momentarily to wipe down or something when a man came in and offered 3x the price for the publication - I'm supposing he would suggest that the 3x price should be cut down to its stated price despite the price display not having been shown. He would still have a posted price that he would feel obligated to uphold, but not if he was a door to door salesman with no established price and an "I'm going to get as much for this as I can based on what others will give for it" attitude that professional salespeople might have - and I'm not intending to use that as a negative statement if it sounds like it.

Pardon me for putting words in your mouth, David. I'm only seeking clarity. If I'm wrong, please correct me and call me a profane name.

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The problem sounds, to me, like a confusion between the nature of posted prices and non-posted prices.
Maybe. How about if we revise your scenario? Frick and Frack don't know each other, but they are at a pain store. Frick is trying to figure out how much paint he needs and tells the paint store guy "I've got two rooms with 400 square feet each needing to be covered. How much do I need? Boy I really hate painting, worse than a root canal." Frack, who is a high school gym teacher and just happens to be in the store to get a spot of pain himself, then says "Say there podner, I might have a solution for you. I don't mind painting if the price is right". He's thinking "Geez, I don't know I've got Saturday free, nothing happening, what the hell do guys charge, well I suppose I could suggest $200 for the two rooms and back off if that's too high". Then Frick says "Crikey, moit, I'd pay you $600 for that". Then I don't see any reason that Frack should say "Rats, I was planning on doing it for 1/3 that price", because he really did not have an assessment of the value to him of the paint job, and he's not being dishonest. It is a fact about the professional painter that he has a pricing scheme which he uses with his customers, except this one customer, and for no cause. It is not at all a fact that Frack even has customers, much less treats them according to certain principles (which he then betrays).
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