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Cake day: June 13th, 2023

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  • When people are unable to make a determination of quality based on actual information, or don’t have the time to do so, a lot of them default to expensive = good.

    Think about it this way. Let’s say you wanted to buy a washing machine that would last you 10 years. You would do research, you’d possibly look up how good each company is based on previous models and how long these have lasted. And then you’d pick some model and buy it. You’re not buying it because it’s good, you’re buying it because their reputation tells you it might be good. But maybe that company decided to sell you cheap garbage this time (looking at you Nvidia). You would never know until it’s too late.

    And this is why economics 101 is as useless as physics 101. In physics, they assume no friction. In economics, they assume perfect knowledge.