Friday, August 30, 2013

Marginalism

This week, our first full week of senior year, we learned about some economic concepts in Mr. Stewart's 8th period class.  One of those concepts was marginalism.  You have the marginal benefits and marginal costs.  One has to decide before acting which is higher.  If the action results in a higher marginal benefit, then it is worth it.  On the contrary, if the marginal cost is higher than the benefit, then it would be obviously wise not to perform the action.  Sometimes, however, you may have invested in something while the marginal benefit was high and the cost was low, but as time passes, the marginal cost surpasses the marginal benefit.  Now there is a decision to be made.  Does one stay loyal to their investment or sacrifice their initial investment and drop out?  Many times, this happens in poker where you're dealt a good hand, but the river doesn't show the cards you were looking for. At this point I just bluff and hope for the best.