Tilted Forum Project Discussion Community - View Single Post - Risk Aversion as a reason for income inequality

guy44 · 05-09-2005, 05:54 PM

Interesting post. I'm going to talk baseball now because, well, I like baseball. Tell my if I've got your thinking down:

The Yankees are your top 5%. They can afford to engage in large risks because they always have more money. They can give bazillions to mediocre pitchers like Wright who've only had one good year - there's a small chance he'll have it again, but even if he doesn't, the Yankees have the money to go out and get another pitcher to take his place.

A team like the Padres has limited resources and, while not destitute, must avoid high-risk, high-reward strategies. They needed a centerfielder last year, but couldn't afford someone like Carlos Beltran, because he costs too much. Sure, adding him to the team has a small but real chance of making the Padres better than the other teams in the NL East, thus allowing them to make the playoffs and collect additional revenue to cover his cost...but that's too high a chance. The Mets, who have the money to ignore a worst-case scenario with Beltran, then signed him for way more than the Padres could ever hope to offer.

In summary, NY sucks.

05-09-2005, 05:54 PM	#2 (permalink)
guy44 Somnabulist Location: corner of No and Where	Interesting post. I'm going to talk baseball now because, well, I like baseball. Tell my if I've got your thinking down: The Yankees are your top 5%. They can afford to engage in large risks because they always have more money. They can give bazillions to mediocre pitchers like Wright who've only had one good year - there's a small chance he'll have it again, but even if he doesn't, the Yankees have the money to go out and get another pitcher to take his place. A team like the Padres has limited resources and, while not destitute, must avoid high-risk, high-reward strategies. They needed a centerfielder last year, but couldn't afford someone like Carlos Beltran, because he costs too much. Sure, adding him to the team has a small but real chance of making the Padres better than the other teams in the NL East, thus allowing them to make the playoffs and collect additional revenue to cover his cost...but that's too high a chance. The Mets, who have the money to ignore a worst-case scenario with Beltran, then signed him for way more than the Padres could ever hope to offer. In summary, NY sucks. __________________ "You have reached Ritual Sacrifice. For goats press one, or say 'goats.'"