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Six months into tariffs, businesses have no idea how to price anything

(www.wsj.com)
462 points JumpCrisscross | 10 comments | 30 Aug 25 20:56 UTC | HN request time: 0.234s | source | bottom
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casey2 ◴[30 Aug 25 21:10 UTC] No.45078043[source]▶
This is how you know most economic theory is a total lie, if it wasn't they would just "price what people are willing to pay" and be forced to eat the loss. Is that cause copper bathtubs are a special item or are you just making up more rules after the fact to patch holes in your leaky theory.
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1. thayne ◴[30 Aug 25 21:18 UTC] No.45078099[source]▶
It's because basic economic theory makes some really bad assumptions. It assumes everyone has the information they need, and sellers can instantaneously change prices in response to changes in demand or cost of production.

Neither of which is true in the real world.

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2. wtallis ◴[30 Aug 25 21:32 UTC] No.45078188[source]▶
I don't think you've successfully demonstrated that those assumptions are bad. They're simplifying assumptions that are necessary to have a "basic" economic theory in the first place—one with tractable and understandable mathematics that can produce an answer without immediately dumping you into partial differential equations or requiring impossibly detailed input data.

The assumptions are only bad if they prevent the simple models from being useful, and the existence of a scenario where a model's simplifying assumptions prevent it from being useful does not prove that the model is worthless.

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3. JumpCrisscross ◴[30 Aug 25 21:41 UTC] No.45078228[source]▶
> basic economic theory makes some really bad assumptions. It assumes everyone has the information they need, and sellers can instantaneously change prices in response to changes in demand or cost of production

This…is not true. What theory are you referring to?

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4. throwawayqqq11 ◴[30 Aug 25 21:58 UTC] No.45078348[source]▶
https://en.m.wikipedia.org/wiki/Homo_economicus

Its a long time known flaw in economics. Im sure there are better models but i still agree with GP, the scientific field of economics is still a joke on par with psychology.

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5. thayne ◴[30 Aug 25 22:10 UTC] No.45078421[source]▶
I don't think the model is worthless. But there also going to be many real world scenarios where they aren't good enough.

It's like doing physics where you assume perfectly uniform spherical objects in a vacuum. It isn't worthless just because that isn't how the real world works, but depending on the circumstance it can also give you incorrect results, and sometimes even be way off.

6. ◴[30 Aug 25 22:12 UTC] No.45078441{3}[source]▶
7. SpicyLemonZest ◴[30 Aug 25 22:13 UTC] No.45078453{3}[source]▶
There's nothing in this article about an assumption of perfect information or of instantaneous price changes.
8. anigbrowl ◴[30 Aug 25 22:47 UTC] No.45078656[source]▶
It's not so much that theory makes these assumptions, as that they describe the simplest economic models. You can make your models as detailed or not as you'd like, but the more work to construct/operate/understand them, the lower your likely return on that effort. It's just like how some people want simplistic games like Candy Crush, others want high investment ones like Dwarf Fortress.
9. WalterBright ◴[30 Aug 25 23:04 UTC] No.45078787[source]▶
> It assumes everyone has the information they need

This is incorrect. Lack of information is priced in as "risk".

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10. sethammons ◴[31 Aug 25 07:14 UTC] No.45081068[source]▶
This is satisfying similar to the ai response in Hyperion as (spoilers) the entire system collapses.