From: "E. Allen Smith" <EALLENSMITH@ocelot.Rutgers.EDU>
Date: Thu, 12 Dec 1996 13:36:08 -0800 (PST)
To: ichudov@algebra.com
Subject: Re: Redlining
Message-ID: <01ICXGBPMPJ4AEL7YC@mbcl.rutgers.edu>
MIME-Version: 1.0
Content-Type: text/plain


From:	IN%"ichudov@algebra.com" 11-DEC-1996 19:45:12.83

>A good question. It is based on the theory that every person has a
>"utility" function in their mind. This function determines the "worth"
>of money and worthiness of risk. 

>If that function as a function of income is strictly concave

	Except in the case of a consumer for whom the lower end is essentially
no different than 0 - e.g., a minimum amount for survival - having a concave
utility function for money (as opposed to less-convertible goods/services)
is irrational. While I am in favor of allowing people to be irrational if they
so desire, I am not in favor of governmental rules (e.g., coercive rules) being
determined by irrationality. See my comments on emotion to Matt M.
	-Allen