Stand and deliver, your money or your life.
Just the sort of choice you might expect a highway robber of old to bellow out -
from under his mask -
as he sits upon his steed -
while levelling his flintlock pistols at a carriage -
containing a gentleman and his fretting female guests.
Seems fair, they have a choice, everyone likes a choice.
Now the interesting thing, is that there is a parallel between that and a modern mortgage choice.
Because if you think about it, the highway man was asking his customers to choose between their past or their future.
Their past? I hear you question.
Yes because money, for the most part is past time and toil converted to paper and metal.
With houses you must also make the same choice.
Your past, (the Deposit), or your future, (the Interest repayments).
Now here's my game theory question.
Which of these combinations is better for a Bank.
High interest on a Small loan amount?
Tiny interest on a Huge loan amount?
Medium interest on a Medium loan amount?
- and why.
* Extra credit if you can say how to pit players against each other - to move the market to the mix you want.
Just the sort of choice you might expect a highway robber of old to bellow out -
from under his mask -
as he sits upon his steed -
while levelling his flintlock pistols at a carriage -
containing a gentleman and his fretting female guests.
Seems fair, they have a choice, everyone likes a choice.
Now the interesting thing, is that there is a parallel between that and a modern mortgage choice.
Because if you think about it, the highway man was asking his customers to choose between their past or their future.
Their past? I hear you question.
Yes because money, for the most part is past time and toil converted to paper and metal.
With houses you must also make the same choice.
Your past, (the Deposit), or your future, (the Interest repayments).
Now here's my game theory question.
Which of these combinations is better for a Bank.
High interest on a Small loan amount?
Tiny interest on a Huge loan amount?
Medium interest on a Medium loan amount?
- and why.
* Extra credit if you can say how to pit players against each other - to move the market to the mix you want.