Oppertunism
Seizing the moment is often easier said than done. This can be due to a number of restrictions. It can either be the result of not understanding that an opportunity has presented itself or that there are consequences for trying to take advantage of an opportunity and failing. The fear of failure is not something that should be underestimated. Another thing that should not be underestimated is how brief some opportunities can be. Finally there are just times where opportunities just do not seem worth the effort initially but not taking it ends up biting you in the butt later on. I have probably not been opportunistic for all of these reasons at least once, despite how minor they were. What follows are some examples of how I did not act in an opportunistic manner, why I did not do it and how it impacted my life.
First are instances where I did not take an opportunity because I believe that the benefit outweighed the opportunity cost. One example of this would have been helping my dad move his drums whenever he went to play with his band. My dad offered to pay my brother and I for helping him, but I chose not to do so. This was due to two factors. The first was that I would be stuck at whatever venue he was playing at for his entire gig, which did not appeal to me. I would rather spend that time doing things I enjoyed. While this might have been offset by the monetary compensation offered, this did not appeal to me either because I rarely needed money. I am the type of person who would rather stay at home than go out somewhere so the money I would have gained would not have been of much use to me. My brother on the other hand enjoyed going to the gigs my dad played at as well as needing more money than me to work on repairs for his car which always had something wrong with it due to its age, so he took the money and helped out my dad.
Another instance where I ignored an opportunity was when my grandfather got my brother a few shares of Tesla. He offered to help me buy a couple of shares as well but I declined. I do not remember the specific reason, but if I had to guess it was because that at the price of the shares at the time and the amount of money I had, I would only be able to buy one or two shares. To me, giving up all my money for only a small increase many months down the line seemed pointless and if a situation arose where I needed my money I would not have access to it. There was also the possibility of the price plateauing or even falling. This was actually when the stock price of Tesla was constantly rising at an unprecedented rate, so I ended up missing out on a lot of money. Funnily enough, my grandfather sold my brother’s shares without consulting him first so he also lost out on a much larger payout.
Both times, my lack of an opportunistic approach was the result of a cost-benefit analysis, although there are some differences between the two. The first example was done strictly by looking at the opportunity cost of the situation and deciding that is was not worth it. The second example also factored in the possible risks involved with buying the stock. Granted those risks were imagined and did not come to pass but the point remains that I factored those risks when there were no such risks in the first example. Despite these differences I still believe both instances mentioned are linked with opportunism.
Look at definition 1. The examples you give don't seem to have an ethical dimension. And I think it's because you didn't realize there is a difference between taking advantage of opportunities when they present themselves (what you wrote about) versus taking advantage even in situations where others are harmed (what you should have written about). If this is right, then the question is why you made the error.
ReplyDeleteNow you should read my most recent post on the class site, since we had a similar type of error by many in the class last week.
I want to try to connect the dots here. We have been talking about transaction costs. A bell should have gone off in your head - how does what I'm writing about connect to transaction costs? If you can't make such a connection, then it might occur to you to find one. I'm not sure that you'd have gone to the dictionary to learn that opportunism is about unethical behavior, but in my ideal world, that is what you'd have done. And you would then see the connection immediately.
I did not think to go to dictionary.com in order to look up the concept. I assumed that the definition of opportunism on the class calendar only used ethics as an example. Either way, even learning the proper definition, I still saw no connection between that and transaction costs. It is my understanding that transaction costs are any cost paid to initiate a transaction, separate from the transaction itself. For example, when transferring money, sometimes a service fee is required. This seems mutually exclusive with ethics. I also have no examples of opportunism to even write about. I am not sure what kind of life you think I lead where I would even be in a position to be opportunistic.
DeleteThe definition of transaction costs that you gave in the comment is incorrect. Transaction costs might better be referred to as transaction governing costs. They are the costs incurred so the transaction goes well. If those costs are not incurred, the transaction might get screwed up. As to not having any examples of opportunism and its avoidance, did you ever learn the story of George Washington and the cherry tree?
DeleteI do not understand the definition of transaction costs that you have given. As far as opportunism goes, the example you gave does not make sense with the definition of opportunism you gave earlier. If every lie counts as opportunism than the blog post would just be 600 words just to say "I lied" and even then, there are many instances where not doing it is more beneficial. With the George Washington example, given the context of George using his hatchet whenever he could and his father being aware of this, the tree obviously being being cut with a hatchet and no one else being around who would have had any reason to chop it, telling the truth makes sense as trying to lie could have made his hypothetical punishment worse as anyone with a functioning brain could have figured it out. Even ignoring all of that, there is still no transaction cost that I can think of within that example.
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