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Comment by ironjunkie | Hacker News Reader

As you state, this comment equals to: "I like Drew, so let me make a donation of 30$ to Dropbox"

That's why I like economics so much. A lot of irrational behavior come simply from the fact that humans are usually terrible to understand the underlying economic transactions taking place.

One of my favorite irrational behaviour is the one in which people value object they got more than the equivalent price in which they could buy//sell that object.

For example: You have an old bottle of wine in your cellar, and it is now valued at 500$. A lot of people would simply put, never buy a 500$ bottle.

But if that bottle was your possession, most of the people would keep it and eventually probably drink it, being completely irrational in regards with the 500$ valuation.

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> One of my favorite irrational behaviour is the one in which people value object they got more than the equivalent price in which they could buy//sell that object.

Art is also a good example. Art is globally unique, so what does it even mean for art to be worth $X? Seems like the only "value" of art is the price the next guy is willing to pay. The price is undefined until it's not.

On the other hand, if I have a fake Van Gogh, I would not be emotional upon liquidating it because it is fungible; some computer and printer somewhere can easily reproduce the piece if I ever need it again. In addition, the price is well-defined because fakes have a well-defined manufacturing cost associated with them. An authentic Van Gogh has an infinite manufacturing cost as the guy is dead.

This is actually a subject dealt with widely in the humanities. The Work of Art in the Age of Mechanical Reproduction is a good start, for instance. It does seem odd for art to be valued by the market, but there are clear ways to construct standard valuation (based on utility, etc) around it.

  some computer and printer somewhere can easily reproduce the piece if I ever need it again [...] well-defined manufacturing cost

This is not as straightforward as some might think! Some people agree with you. Some don't. "Fake" is a spectrum as well. Is it a reproduction of an original work, or an original work falsely attributed to a particular artist? In the second case, if the quality is high and scholarship has emerged around that work, is it "less valuable" to own after it is revealed as fake (for one individual, not at market prices) or is it in a sense more interesting? Is it perpetrated to be real or simply a print? Even if it's an authentic creation of the artist, was the work been authorized outside of their canon in a less official way? What about photographs, and later editions of them (by either the artist themselves, their estate or family, a dealer, etc)? Check out Richard Prince and his "decertifications" of paintings.

Startups offering blockchain solutions to this landscape, of course, are emerging. But they face the same problem everyone does in that market: how can physical assets, and their movements, be indisputably registered to a blockchain?

> "Fake" is a spectrum as well.

I suppose this is true, very interesting. A piece (real or not or unknown) with history, can become (de)valued in its own right.

> how can physical assets, and their movements, be indisputably registered to a blockchain

For example, I think VeChain and Modum use physical ID chips, but I don't see how they solve this problem. It seems like a tall order to create an injection between physical assets and digital ones. I could see how this would be done if the physical assets were fungible and centrally sourced, which is only going to be the case with certain physical assets.

How would people register those assets to the blockchain? No one in the world should be able to register my laptop, because they don't have it. It would need to be derived from physical measurements, but this is a can of worms because the measurements can change; physical matter is not immutable in the way that digital matter is. Coupling the two seems like a tall order, or maybe I am small minded.

You also have to consider the level of effort it takes to sell the bottle to someone who isn't an experienced wine dealer, and the spread that likely exists between the buyer and seller.

So even though it may be $500 to buy new, it's probably more like a $100 bottle if they sell it, so it's like getting an 80% off deal? Why not drink it?

> the spread that likely exists between the buyer and seller.

Spread doesn't have to favor a buyer.

No, it typically favors the middleman.

You have to think about it in terms of who demonstrates excess demand for the trade.

If the buyer is more eager to transact, usually he ends up paying higher than fair value. The opposite is usually true if the seller is more eager for the transaction.

If you have an item of unique value, you may aggressively sell it, as in your initial post to which I had replied. But if you just post a price -- take out a classified ad every week, for example -- then you can wait for an eager buyer to come along.

Even the middleman often crosses the spread. A market-maker might have to clear out of excess risk/inventory ASAP, for example, which requires him to initiate transactions.

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