Given that Economists overwhelmingly get these things right more than our intuitions, I'm really curious what explanations they have.
It might, but there are lots of sticky things in human behaviour. A person fully aware of the situation in your statement, and only looking for money may do so, but the vast majority of people (off HN) likely do not have the skills (tech/business), do not care about the skills, might not want to start a company or simply are happy enough with their life to not want to rock the boat too much.
Here's a mathematical question: if you could flip a coin, with a 50% chance of getting a billion dollars, and a 50% chance of never having more than $1000 in your bank, would you flip the coin?
The "mathematically correct" answer would be to take the bet, but the rational decision any well-settled person would take is very likely not to flip.
You're right, there's only one rational bet.
* More if you set up with a bank with intraday transfers.
...yeah I get "what if I spent $900 on a purchase and got the money back the next day" is a valid criticism, but I mean, just above poverty.
By the way the P(expected) = (1 billion * 0.5) + ((almost) zero * 0.5) = a very respectable 500 million, which even at $1000 a day would take 500,000 days or over a thousand years.
As in like 70% of Americans
> any well-settled person
I would expect the average SWE on HN to be worth more than a $1000. (Of course there are exceptions, I'm not an SWE myself but I'm only talking about the average person for simplicity.)
https://www.cnbc.com/2023/10/28/americans-median-net-worth-b...
On the contrary, the bet posed was "Here's a mathematical question: if you could flip a coin, with a 50% chance of getting a billion dollars, and a 50% chance of never having more than $1000 in your bank, would you flip the coin?"
It's a cash cap, not a risk statement.
So by the terms, you do just need to set up a way to ensure a cash flow to you while you continue to build up more illiquid safety net and ensure fewer and fewer things cost you money even if you don't own them.
Even if you want to reframe as always being $1000 away from being in debt, that's easy, there are financial arrangements that can let you structure extraordinary assurance that $1000 would never dip below zero, even if you accept it as a narrow lane between the cap and bankruptcy.
Why doesn't it?
If someone is willing to sell you something for $1M - and you can make it user hostile and extract $10M from it - why not keep making that $1M purchase of new dating apps?
As long as Match buys the apps for less than what they can extract from them - it's sustainable.
So standard economics don’t apply. Also, the statement “ Economists overwhelmingly get these things right more than our intuitions” needs a citation.
Not an economist but starting a new dating app is very hard because those suffer network effects. It's not like most apps which can work on their own.
That's why there's no stress going on at Match group to keep the monopoly running, those new apps don't come up often and cannot come up often due to the nature of the business.
That's also why most of them suck so much even before being bought by the monopoly. To overcome this strong network effect stacked against them, they have to push a lot of marketing levers, some of them unethical and others are very costly.