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IRAN: Ebrahim/Simon

Thursday, July 13, 2006

Performane of Tact

Congratulation!

I hope you have good times in your new house.
I think your tact in estimating another buyer's bid price from the agent's words has a good performane in this transaction. It is what a philosopher can do.

posted by ebraz @ 5:02 pm    0 comments

Winning Bid

That was a great analysis of the situation I was in.

So operating (nearly) blindly we phoned in our bid as did the other party in the game - and the seller was able to chose the one he liked best.

I put it like this because the variables included more than price. Who could move fastest, who was in the best position to complete the deal and not pull out, etc. So price was not everything here. Or at least the calculation of 'best offer' included factors that went beyond the best bid price.

Our strategy was, however, quite simple: calculate a bid price that was both within our means and was also in accord with our hopes for doing work on the house if we got it. We looked at the maximum we could pay in those conditions and made a guess about the 'opposition'.

One thing we think we knew (and I think we were right) is that the opposition had originally made a bid lower than our own. The agent had told us: 'we have received another offer'; not 'we have received a higher offer'. So we guessed that they had less to play with than we had and that we did not have to go as high as our maximum.

Eventually we decided on a number just a little bit more than the original asking price.

And we got it! So now we have to get everything else organised - schools for the children being uppermost in our minds. Now we have to wait and see if the whole thing unravels (our buyer pulling out for example) or whether by the end of the summer we will be moving into a new home. Fingers crossed.

Simon

posted by Simon @ 3:44 pm    0 comments

Hot Weather

I am wondering if you have bougth the new house or not. I hope so! Now that the weather is getting hot, moving to the country seems more desirable.
Here in Tehran we are tolerating a really hot weather. Some days it goes up to 45 degrees centigrade. I have not ever undergo such hot days in Tehran. Although living as well as working in such a hot day seems difficult, expecting moderate weather in the near future turn it easier.
Another upwarding trend that is controversial these days in Iran is the increasing prices. In the last two decades our economy has undergone more than 15% inflation rate each year. But, the prices trend seems to be still higher than that this year. Not having hope to any decline in this trend makes it really unbearable specially for the people in the lowest income groups. The people who was the majority in voting for a government with new ideas in managing the country in the last year's presidential election.

posted by ebraz @ 3:04 pm    0 comments

Wednesday, July 05, 2006

Economist Role!!!

What an excitement game you are playing!

As you know not only philosopher but also economists can do nothing special in this case unless they have access to some asymmetric information about the rival's reservation price, and this information is useful only if there is not considerable delay to write a post!!! … sorry

What economists do in such a complicated case is observing the game and analyzing the results; but after being known of the result!!!

To be more serious, I want to talk about the structure of this game or the role of the agent in that. The agent can design the game in variety of methods. As a case in point, he can set a multi-period auction; each buyer offers his bid price and the other buyers can offer a higher price. The game goes on by the time that nobody offers a higher price. In this method each buyer has more information about other buyer's decisions during the game. In other word, he knows the rivals' willingness to pay in each stage. Therefore he can decide on whether he offers a higher bid or not based on real information.

In the game you are playing, the agent has restricted the game to one period. Besides, you do not have any information about your rival's preferences. What is the result of this game? I think in this case the transaction will take place in a price higher than the last case. In other words, to won the game each family may offer a price more than his willingness to pay.

The method that the agent selects will influence on the games benefits. A specific method may have considerable benefits for the seller while another method may satisfy the buyer. The contract between the agent and the other players also may affect the agent's strategy (even in favor of one side).

It seems necessary that some kinds of regulation be imposed based on which the agent acts fairly. Economists may have a role in designing such regulations.

posted by ebraz @ 7:10 pm    0 comments




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