Re:Who wants to play the status game?
by humansvsrobots on Saturday January 25, 2020 @07:53AM
(#22146042)
If a person is wealthy and doesn't need to spend that amount during the entire duration of Z, since they have other wealth to spend, they would likely choose Z for the higher return over the same time period.
So only a relative poverty would encourage the person to choose A.
Assuming they have unlimited life span. If not and their lifespan is uncertain, then the value of Z is reduced by the chance of not surviving long enough to profit from it.
If they can invest A and get a higher return than waiting for Z, then A is a more profitable choice.
A is a single payment of $10,000.
B is two monthly payments of $5250. Or, in other words, a 5% improvement over A in total payments.
C is three monthly payments of $3675. Again, 5% better than B in sum.
I could completely see someone doing a pairwise comparison between A and B, and picking B for the 5% increase, because the time difference is not that important. Same again for B and C; it's only one more month for an extra 5%.
However, I could also see that same person comparing A and Z and deciding that instantaneous vs a period of two years is not worth the wait.