Comment by retsibsi
3 hours ago
So it should be the highest price such that you're not indifferent, you marginally prefer to buy it. The point is that you're right at the threshold where it's just barely worth it to you.
3 hours ago
So it should be the highest price such that you're not indifferent, you marginally prefer to buy it. The point is that you're right at the threshold where it's just barely worth it to you.
The gap between total indifference and wanting something bad enough to bid on it is always going to be more than $.01.
I reckon that's empirically false. Shops set prices like $499.99 for a reason.
(And it has to be theoretically false, otherwise $X is equivalent to $X + $0.01 for all X, and so if you'd buy something at 1c you'd buy it for the contents of your bank account.)
If you still dispute this, you need to try to explain how a larger price difference can affect your decision. If you'd happily place a $1 bid, and you'd definitely not place a $100 bid, and a 1c difference could never deter you from placing a bid, then... well, how is that possible?
Regarding the last part: it's simple, $1.01 is less than $100
This process doesn't work endlessly. You can't just add $.01 a billion times and I'd still pay it. But it works once or twice.
Shops set prices like $499.99 due to funny psychological effects: $499.99 is still a price "in the 400s" while $500 is "in the 500s". Nobody sits down and thinks logically about it and concludes that no, the $.01 difference between $499.99 and $500.00 crosses the line. But people see $499.99 and the brain initially goes "oh, it's only 400-something".
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Adding a single grain of sand to a small pile of sand never turns it into a big pile of sand, yet big piles of sand exist... well, how is that possible? https://en.wikipedia.org/wiki/Sorites_paradox
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