It’s a minor point and probably not worth much more effort, but I’m still confused. If I’m ignorant enough about my total wealth that a finding that a bill turns out to be a $1 instead of a $5 doesn’t cause me change my best estimate of my non-wallet wealth, then why isn’t it $4 worth of bad news? I don’t see the flaw in that reasoning.
Oops, the above should be, “total wealth differences in the region of $4”, not “total bank account wealth differences”. Hm. This is an interesting problem in approximate rationality—if your estimate of “bank account + wallet” and “bank account” is pretty much the same total number, and you learn how much money is in your wallet, what have you learned?
if your estimate of “bank account + wallet” and “bank account” is pretty much the same total number, and you learn how much money is in your wallet, what have you learned?
Hopefully that your bank balance is such that whatever you carry in your wallet pales into insignificance.
It seems to me like you’ve learned only how much what’s actually in your wallet deviated from your best guess about what was in there. If non-wallet wealth effects can be safely ignored, then learning of an $X dollar deviation can be taken as a shock of that size to your total wealth.
It’s a minor point and probably not worth much more effort, but I’m still confused. If I’m ignorant enough about my total wealth that a finding that a bill turns out to be a $1 instead of a $5 doesn’t cause me change my best estimate of my non-wallet wealth, then why isn’t it $4 worth of bad news? I don’t see the flaw in that reasoning.
Oops, the above should be, “total wealth differences in the region of $4”, not “total bank account wealth differences”. Hm. This is an interesting problem in approximate rationality—if your estimate of “bank account + wallet” and “bank account” is pretty much the same total number, and you learn how much money is in your wallet, what have you learned?
Hopefully that your bank balance is such that whatever you carry in your wallet pales into insignificance.
It seems to me like you’ve learned only how much what’s actually in your wallet deviated from your best guess about what was in there. If non-wallet wealth effects can be safely ignored, then learning of an $X dollar deviation can be taken as a shock of that size to your total wealth.