Back in elementary school I used to purchase hot lunches from other students (until the principal got wind of it and asked me to stop). These were the hot lunches other students had bought (or their parents had) from the cafeteria. I rarely paid anything near full price (usually 25% to 50% of, uh, “retail”). I either ended up with some bonus food over what I would have gotten purchasing my own food at “retail” or I saved a bit of cash.

For a while I couldn’t figure out why other kids were willing to do this. Were they being irrational? Were they clueless? Nah. Later it donned on me… most of my trading partners probably were a mixture of the following types: (a) parents pre-paid for lunches so the kids never got the cash but, given the cash, would have happily purchased cookies instead (b) were on the low income reduced price and often also pre-paid or even free lunch programs. They were thus breaking even or even making money from the transaction (c) were second guessing their purchase of the lunch (perhaps after getting a closer look or drooling over someone elses better looking alternative) and, since they couldn’t return the food to the cafeteria, I was providing them with a straightforward solution to their problem.

In any case, the idea is that value is relative. And that’s also why price is neither high nor low on anything. It’s all relative to value and value is relative to the individual (and often even the context such as the time, place, and mood).

-jr

Bas
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