Friday, April 21, 2006

The \$325,000 washer-dryer


  1. Blogger Scott
    4/21/2006 11:53:00 PM

    From the article:

    Two years ago, Ms. Lippman handled the sale of a three-bedroom prewar apartment on the Upper East Side that garnered three offers at its listing price, $1.6 million. But when told that the existing washer-dryer had to be removed upon the sale of apartment, two sets of buyers backed out, while the third dropped the bid to $1.275 million.

    It's a stretch to call that a $325k washer-dryer. According to the Kahneman-Tversky loss aversion theory, dropping your bid from $1.6m to $1.275m on being told the washer-dryer has to be removed is not the same as being willing to pay $325k to have it installed! :)

  2. Blogger Scott
    4/21/2006 11:58:00 PM

    (Also, the premium is not so much for the washer-dryer as for the right to have one.)


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