Thursday, February 15, 2007

Post V-day thoughts

So for a little treat for single people, we can revel in the cost of Valentine's day, see this link from the Economist's Free Exchange blog.

What the Economist's blogger does not explore is why demand is so inelastic on Valentine's day. My quick little theory, guys generally know the implicit cost of no action (equal to the net present value of future benefits), and thereby calculate that the present value of the future benefits (both explicit and implicit) of the relationship or date(s) is greater than the explicit costs of the valentine's day gifts and greater than the loss of benefit that equates to no action.

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