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Reference Points

I just spent some time reading Thomas Schelling's "Choice and Consequences" and I heartily recommend it. Here's a Google books link to the chapter I was reading, "The Intimate Contest for Self Command."

It's fascinating, and if you like LessWrong, rationality, understanding things, decision theories, figuring people and the world out - well, then I think you'd like Schelling. Actually, you'll probably be amazed with how much of his stuff you're already familiar with - he really established a heck of a lot modern thinking on game theory.

Allow me to depart from Schelling a moment, and talk of Sam Snyder. He's a very intelligent guy who has lots of intelligent thoughts. Here's a link to his website - there's massive amounts of data and references there, so I'd recommend you just skim his site if you go visit until you find something interesting. You'll probably find something interesting pretty quickly.

I got a chance to have a conversation with him a while back, and we covered immense amounts of ground. He introduced me to a concept I've been thinking about nonstop since learning it from him - reference points.

Now, he explained it very eloquently, and I'm afraid I'm going to mangle and not do justice to his explanation. But to make a long story really short, your reference points affect your motivation a lot.

Value, Price, and Cost

On Tynan

The concept of Value vs. Price is one that I am inexplicably fascinated by. Maybe it's the fact that most people ignore it entirely, or maybe it's because following its principles virtually guarantees success in any area.

Most people do not understand the difference between value and price or, at the very least, greatly underestimate it.

So, what is the difference between value and price? Value is the benefit derived from an action, and price is the benefit lost by performing an action. What makes this such a profound concept is that every action has a value and a cost associated with it, and it is usually fairly easy to measure. Our unconscious minds are constantly evaluating the price and value of every possible choice, which ends up governing many of our actions.

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