Tuesday, April 10, 2012

The Very Visible Role of Prices in Markets

No asking price, no deal, say house huntersHERE

Sellers who don't list a price for their property are putting off the vast majority of potential buyers.

New research from PRDnationwide has shown that properties without a listed asking price deter buyers. A poll from the company has indicated 75% of potential buyers say they are "greatly" deterred by properties without an asking price, while another 20% said they were "slightly" deterred. Only 2.5% of respondents claimed they were not deterred by properties with no asking price.

PRDnationwide research director Aaron Maskrey said vendors and agents should take note of the results when listing properties.
"Ultimately, you could be missing out on potential purchasers by not advertising a selling price or giving a range," he said.

"According to the poll, estimating a sale price ensures every opportunity to maximise viewings and competition," he said.”

Thos snippet confirms a basic fact about how markets work, often missed apparently by those spouting the invented myth of “an invisible hand’, which was a metaphor used by Adam Smith to “describe in a striking and more interesting manner” the hidden motive of the insecurity of an individual merchant which led him to prefer domestic to foreign trade.

Nothing in Smith’s use of the metaphor said anything about, or referred in any way, to the very visible role of prices in the workings of markets, nor to the “hand of god”, nor to any “miraculous” forces at work in markets, and none of which Adam Smith mentioned in his singular mention of the metaphor in Wealth Of Nations.

In fact, it is clear that markets cannot work at all on the basis of invisible prices! It is their very visibility that allows markets to work. The idea of “invisible” forces at work is nonsense, and a moment of reflection shows it to be nonsense.

Why modern economists have accepted the myth that “an invisible hand”, rather than mandatory very visible prices, govern markets is a mystery beyond comprehension of the “Emperor is Naked” kind.



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