The problem is that this is well a well studied problem and your first principles approach to it gives us the wrong results. Rent control policies like this one (only works on buildings 15 years old or older) do not impact new housing starts.

I think your illustration has failed, though, because I would very much choose b). I consider a) as an evil in the world and would avoid participating in that if at all possible. b) sounds like a really good choice for long-term investment in in sustainable society.

> All else being equal

Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave.

> Okay but all else is not equal, and in the real world, it is never equal. These thought experiments do nothing to improve conditions in the real world, since they are based on flawed models of how people behave.

By that logic, nothing affects anything else and we should all give up trying to think or plan.

I don't agree. We know that people are not 'rational actors' that maximize personal profit at every turn, and we should not base our economics around that known false idea.

I think it is wise to produce better models with new information - not to ignore everything or to knowingly use false models. People do not - and should not - act according to those 'rational' ideas of maximum profit.