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Question Pool

January 12, 2012

I always have more questions than I can solve.  Some of them are discussed by other in philosophy, science etc. Some are not. I tend to provide my own answers without reference to existent ones if there are some. To sharpen my own mind.

1 why bad money drive out good? Is for something, the bad one drive out good, does that mean that variance of the quality is of little significance ? Or what kind of human nature motivates the trend?

The principle was proposed by Gresham, so  called Gresham’s law. It reflects the psychology that human tend to get what they want with the least possible price paid. If two sorts of money are used on market which are compulsury of same face value. One is undervalued , good money as we say.  People will try to use the other sort as far as they can. If the money is undervalued so that the face value does not reflect its material value, people tend to destroy it to get the  material.

The principle is often used as a metaphor, meaning high quality products are driven out by lower quality ones of a same type.

When can such driven out  happen?

Suppose it is noticeble that something can be obtained with less efforts than people are actually paying. As they realize it, they would pay less than they do.

The driven out occurs when it is realized on a general level, that the benefits can be obtained with less cost .  It is has something to do with the evaluation method. Usually, there is always space to save efforts if they are evaluated according to a standard method.  Because the latter usually goes this way.

The Standard tests illustrate nicely.

Take the GRE test for instance.  Ideally, we expect the result of the test to say something about the test taker’s capacity of analogically reasoning, qualitative reasoning.  We are interested in the relative ranking among different test takers.  Test-takers take the test for a high score.  Not evaluation for their own capacity.  They would focus on the items that most probably been tested. So a high score indicates high capacity over the item tested, nothing else.

If we evaluate according to a standard method, it is necessary that we will drive out good things that have invovled more efforts?


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