Biblical Adverse Selection

And Jesus said, Behold, two men went forth each to buy a new car.

And the car of the first man was good and served its owner well; but the second man’s was like unto a lemon, and worked not.

But in time both men grew tired of their cars, and wished to be rid of them. Thus the two men went down unto the market, to sell their cars.

The first spoke to the crowd that had gathered there, saying honestly, My car is good, and you should pay well for it;

But the second man went alongside him, and bearing false witness, said also, My car is good, and you should pay well for it.

Then the crowd looked between the cars, and said unto them, How can we know which of ye telleth the truth, and which wisheth falsely to pass on his lemon?

And they resolved themselves not to pay for either car as if it were good, but to pay a little less than this price.

Now the man with a good car, hearing this, took his car away from the market, saying to the crowd, If ye will not pay full price for my good car, then I wish not to sell it to you;

But the man with a bad car said, I will sell you my car for this price; for he knew that his car was bad and was worth less than this price.

But as the first man left, the crowd returned to the second man and said, If thy car is good, why then dost thou not leave to keep the car, when we will pay less than it is worth? Thy car must be a lemon, and we will pay only the price of a lemon.

The second man was upset that his deception had been uncovered; but he could not gainsay the conclusion of the market, and so he sold his car for just the price of a lemon.

And the crowd reasoned, If any man cometh now to sell his car unto us, that car must be a lemon; since we will pay only the price of a lemon.

And Lo, the market reached its Nash equilibrium.

From username42 on Reddit. Hat tip: Michael Lane.

Your challenge: Explain an economics principle the King James Way.

Comments

If you put lipstick on a pig, it's still a pig. Though I'm not sure that this is lipstick. But: if the fellow with the good car actually needs to sell it, irrespective of the quality of the car, then the nash equilibirum doesn't happen. But economics consists of choosing which simplifications lead to the correct political outcome, so I suppose it's as good as I could expect

if you can't spot the gorilla in the room ask a biologist.
this ability/gift also works with car stuff

The second man also backed the GND and believed that there was Russian collusion, a sure give away that he was stupid.

abolish air traffic
so no more birds and airplanes?

This parable explains why Chinese made goods dominate Walmart and other American retail. You think a good tiki lamp made out of good material is only a few dollars? But for a few buck, its cheap enough to find out!

It's true that the specific example designed to gove real-world context to a complex problem in order to facilitate learning completely falls apart under scrutiny it was never designed to address.

But I'd also venture to guess, like your point, that you are the kind of critical thinker that thought it was the fault of the teacher when receiving bad marks.

Here I was, thinking the punch line would involve cutting the price/man/car in half.

Now that deserves an unspecified number of upvotes (TBD by the market...)

I was hoping Thor, Vishnu, and Mohammed would make a crossover appearance to take on Income Inequality.

Yea verily, saith the Lord, incentives mattereth unto the fortieth generation.

"Fortieth, oh Lord?" saith Doubting Thomas.

"Fortieth, giveth or taketh" saith the Lord.

In the beginning, God created supply and demand. But the economy was formless. So God said: "let there be Free Markets." And He saw the Free Markets, and they were good. Then God said: "let there be Rational Actors." And He saw the Rational Actors, and He saw that it was good.

The Rational Actors were naked, yet they felt no shame. But the Socialist was more crafty than any other creature, and he bade the Rational Actors to eat of his tree. And they ate of the tree. And they became ashamed and afraid.

And then God came along and smited them all. Amen.

'Explain an economics principal the King James Way'

Thou shalt know, verily, the difference between principal and principle. For one marks the path to be tread to enter past the gates of our father's mansion in heaven, while the other, verily, is not thy pal.

Jesus said unto them, "They need not depart; give ye them to eat."
And they say unto him, "We have here but five loaves, and two fishes."
He said, "Bring them hither to me."
And they did all eat, and were filled: and they took up of the fragments that remained twelve baskets full.
And they that had eaten were about five thousand men, beside women and children.
And his disciples said, "What the helleth are you doing? Haven't you heard about scarcity and market demand?"
Jesus said unto them, "The kingdom of heaven cares not for these things. They were hungry, and I fed them; how much more can men's souls be filled?"
And his disciples said, "Yea, but what about poor Jebbadiah the fishmonger over yonder? His wife will killeth him when he goes home with seven upon seven barrows of unsold sardines."
And the Son of Man saw the error of his ways in interfering with the delicate balance of the marketplace for fast-moving consumer goods. And Jesus wept.

In the second act, Jesus goes to the Temple, and says 'Verily, thou shall all worship Mammon in the house of my Father.'

And the money changers cheered.

And so Jesus gave all fives loaves to the money-changers, and they promised to come back later - after having multiplieth those loaves by multitudes - and trickle the loaves down upon the people.

And the water was sorted into tranches, and transferred to an off balance sheet vehicle, and thus became wine. Except the AAA pool, which they kept for themselves.

Jesus was risk-loving, as per this parable: Parable of the Talents. The “Parable of the Talents”, in Matthew 25:14–30 tells of a master who was leaving his house to travel, and, before leaving, entrusted his property to his servants.

Notice that Jesus was not against receiving interest from bankers, compare this to the profit Mohammed in the Koran. From the above parable, scolding the guy who simply returned the money without increasing it: "His master replied, ‘You wicked, lazy servant! ... 27 Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest."

Jesus was not risk adverse, which dovetails with his earthly mission.

"And the Son of Man saw the error of his ways in interfering with the delicate balance of the marketplace for fast-moving consumer goods."

But he refined that insight somewhat, when he presented it to his thesis examiner at Wilderness University.

There is an SMBC about this but their search engine sucks.

I don't think this is very Biblical. Biblical narratives are usually pretty terse. The whole story of the Tower of Babel is only nine verses.
Also, I personally am not a Christian but I do think it is very insensitive to put this parable in the name of Jesus. Even if the original author did so, it would have been easy to only quote after the first three words. Current wording is offensive without serving any narrative or pedagogical purpose.

Harken, saith the Lord, to those who find humour offensive. And then cut their goollies off.

& Одной

I think it's safe to make light of the Christians, but I could not see anybody using the Quran in the same way.

Speaking of the Koran, it seems to allow for predatory lending (of the non-interest bearing type) if there's mutual consent: “Do not devour another’s property wrongfully – unless it be by trade based on mutual consent.” (Al-Nisa: 29)

And this: "Prophet Muhammad (pbuh) said: “The seller and the buyer have the right to keep or return the goods as long as they have not parted or till they part; and if both the parties spoke the truth and described the defects and qualities [of the goods], then they would be blessed in their transaction, and if they told lies or hid something, then the blessings of their transaction would be lost.” [Bukhari]"
The Koran is for full disclosure of defects or your money back (which I think is in the so-called UCC for consumer sales but not for between merchant sales, Rayward is the authority here).

Thou knowest not any ministers or parsons. One who joketh in good humour about his faith is very popular with his flock.

And Jesus said unto them, blessed even are those who lack skill in any labor, for there is some labor that they are least bad at doing.

Good one! Reminded me of this

https://marginalrevolution.com/marginalrevolution/2013/01/chief-rabbi-sacks-on-comparative-advantage.html

And low, a wise man in the crowd, knowing that the cost of the lemon was the cost of a good car less the cost and trouble of repair, did go sell all he had and acquired the lemon and repaired it.

Today's gospel is from Luke 5: 1-11, the story of when Jesus called Peter, James, and John to follow Him and be fishers of men rather than fishers of fish. Our priest used this in the homily, but brought the lesson current by applying the lesson to accountants and managers etc. to devote themselves to a higher calling (fishers of men) to make the world a better place. Obviously, neither Luke nor the priest understands economics: Peter, James, and John, and today's accountants etc., make the world a better place by being producers in their field of expertise. I sat there in church this morning questioning the wisdom of Luke and the priest, and wondering if I should tell the priest (Luke's not available) how economics works. What's your calling?

So Jesus believed in getting kicked upstairs into management ("fishers of men") from doing work in the field ("fishers of fish") was a good thing? See also my question to you about the UCC and the Koran, upstream.

Well consider Mary and Martha, who gained the Messiah’s praise?

How about the following illustration of principal-agent problems?

"1 And he said also unto his disciples, There was a certain rich man, which had a steward; and the same was accused unto him that he had wasted his goods.

2 And he called him, and said unto him, How is it that I hear this of thee? give an account of thy stewardship; for thou mayest be no longer steward.

3 Then the steward said within himself, What shall I do? for my lord taketh away from me the stewardship: I cannot dig; to beg I am ashamed.

4 I am resolved what to do, that, when I am put out of the stewardship, they may receive me into their houses.

5 So he called every one of his lord's debtors unto him, and said unto the first, How much owest thou unto my lord?

6 And he said, An hundred measures of oil. And he said unto him, Take thy bill, and sit down quickly, and write fifty.

7 Then said he to another, And how much owest thou? And he said, An hundred measures of wheat. And he said unto him, Take thy bill, and write fourscore.

8 And the lord commended the unjust steward, because he had done wisely: for the children of this world are in their generation wiser than the children of light."

That's a tough parable to crack, I had to look to a secondary source. The confusing sentence is this one: "And the lord commended the unjust steward, because he had done wisely" - you have to understand this is spoken ironically, in the same way in the Epic of Gilgamesh, Enkidu praises the temple whore for being a home wrecker (ironic praise).

I don't think anyone knows the authorial intent of the parable. It is one of the complexities of the Bible which can make it more interesting to an atheist, but feel threatening to a Christian.

I think the following verses make the intent obvious enough, actually:

----
9 And I say unto you, Make to yourselves friends of the mammon of unrighteousness; that, when ye fail, they may receive you into everlasting habitations.

10 He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much.

11 If therefore ye have not been faithful in the unrighteous mammon, who will commit to your trust the true riches?

12 And if ye have not been faithful in that which is another man's, who shall give you that which is your own?

13 No servant can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.

14 And the Pharisees also, who were covetous, heard all these things: and they derided him.

15 And he said unto them, Ye are they which justify yourselves before men; but God knoweth your hearts: for that which is highly esteemed among men is abomination in the sight of God.
----

So, this is a message to anyone who claims religious authority. If you are unrighteous, God will deny you any reward, so it makes sense to make yourself popular on Earth and take what you can now by telling them that their cheating of God is okay. But if you wish to be rewarded by God, you will have to be righteous, and accordingly unpopular because that includes not giving others an excuse to be less than righteous.

And thus it is a message to the populace at large, that if a religious leader offers you a path to God that does not demand righteousness, he is a false leader looking to earn a reward for his laxity on Earth, since he will not receive one in Heaven.

For where your treasure is, there will your heart be also. - King James Version

I am retired. While I worked, I tried to do as your priest suggests.

Among other tasks, I often worked complex (complicated is bad)accounting, reporting, and valuation issues/disputes dealing with often-contentious in-house and outside parties. I consciously (worked at it) treated all in a charitable, honest and respectful manner; impartially analyzing and researching all aspects (GAAP, laws, industry standards, applicable government regulations) to derive a (no one is perfect except God) just solutions, not necessarily to the corporation's advantage (that could be troublesome). Often, the other parties were not so inclined. My directors/owners were more open to reasoned "compromises" than many of our opposite parties.

Jesus ordered his apostles to make disciples of all nations.

You worship an illegal immigrant. Build that wall! #maga2020

Jesus said: “An Economist was going down from the Federal Reserve to Washington, when he was attacked by politicians and other self interest groups. They stripped him of his arguments, mocked him and went away, leaving him half dead. An Austrian Economist happened to be going down the same road, and when he saw the man, he passed by on the other side. So too, a Classical Economist, when he came to the place and saw him, passed by on the other side. But a Behavioural Economist, as he traveled, came where the man was; and when he saw him, he took pity on him. He went to him and supported his policies, and listened respectfully to his arguments on Fiscal Stimulus and Quantitative easing. Then he put the man on his own donkey, brought him to an inn and took care of him. The next day he took out two denarii[c] and gave them to the innkeeper. ‘Look after him,’ he said, ‘and when I return, I will reimburse you and also be willing to peer-review his paper.’

This is the best thread I have ever read here - hilariously funny! All the comments were funny too. As a side effect, I learned about Nash Equilibrium, about which I was ignorant.

Thank you.

You might enjoy Herbert Gintis' textbook on Game Theory, it is as much fun.

I, too, did not know it was a Nash equilibrium. I think of it as the Akerlof principle. Very well done! (as opposed to medium rare).

Nobody has mentioned anything about the cheese makers? Which is not meant to be tak­en lit­er­al­ly, as ob­vi­ous­ly it refers to any man­u­fac­tur­ers of dairy prod­ucts.

https://www.youtube.com/watch?v=RpkWT5voTSE

And of course, blessed are the meek. Which is nice, one is glad they’re get­ting some­thing ’cos they have a hell of a time.

"God said: fish in this lake is plentiful and here for thy family. Then the fishermen took more and more fish from the lake, to feed their ever larger family. Until one day no more fish there was. So they preyed God but God did not respond."

Build a man a fire and he is warm for a day. Set a man on fire and he is warm for the rest of his life.

You shall covet your neighbor's wife

And God sayeth: Thou shalt experience seven years of plenty, followed by seven years of stock Marketh Crashes. Thye Children shall therefore not find their places to worship the CEOs and instead play Fortnite in their Baysemente, thriving on more immediate gratification than god giveth to its sheeple, and living happily forever after as heretics worshipping Spaghetti Monsters. Ramen.

Blessed are those whose time horizons are long: for they shall inherit the earth.

The "Blessed" are really greedy, little people aren't they? In the end its all about taking and having, isn't it? Never trust a virtue signaler. Never.

There is no such thing as a lemon car. If you had multiple problems on a your corolla but fixed them the corolla is now fine. It's like flipping a coin that comes up tails a few times, it is no more likely to come tails again.

Woe unto ye who hath acquired the accursed lemon.

Failures cascade. They are not independent.

For the kingdom of heaven is like unto a man that is a householder, which went out early in the morning to hire labourers into his vineyard. And when he had agreed with the labourers for a penny a day, he sent them into his vineyard... And about the eleventh hour he went out, and found others standing idle, and saith unto them, Why stand ye here all the day idle? They say unto him, Because no man hath hired us. He saith unto them, Go ye also into the vineyard; and whatsoever is right, that shall ye receive. So when evening was come, the lord of the vineyard saith unto his steward, Call the labourers, and give them their hire, beginning from the last unto the first. And when they came that were hired about the eleventh hour, they received every man a penny. But when the first came, they supposed that they should have received more; and they likewise received every man a penny. And when they had received it, they murmured against the goodman of the house, Saying, These last have wrought but one hour, and thou hast made them equal unto us, which have borne the burden and heat of the day. But he answered one of them, and said, Friend, I do thee no wrong: didst not thou agree with me for a penny? Take that thine is, and go thy way.

And so the next day, everyone only showed up to work at the eleventh hour, and vineyard output collapsed, and the foolish householder learned to set wages equal to marginal production.

Blasphemy is hilarious. Next let’s illustrate economic principles with stories about killing Jews in Dachau. Ha ha.

Except for the fact that is not how markets work, at all.

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