Ticket scalping: is this illogical?

[UpstateMatt]

I can't decide if I'm being completely irrational here or not:

1)A friend of mine informs me that tickets for concert X are about to go on sale.

2)I tell him that I'm going to try to get the tickets for face value ($50 each) but I'm not willing to pay the likely price on the secondary scalping market ($250 each).

3)He replies that it's irrational for me to go to the concert then, because if I get the face-value tickets, i could just sell them on the secondary market.

Assuming that I could truly gain +$250 by selling (or that I wouldn't pay $200 on the secondary market; basically that my threshold is not between the profit and secondary market cost), am I being irrational here?

I can't decide. My instict is that there is a difference between spending my current resources and money i could potentially earn, but i can't put my finger on it. I don't think the decrease in marginal value of dollars has an effect here - we're not talking about a huge sum of money relative to my net worth, income, etc.

matt

[tpir]

This sounds like a non-rational (as opposed to rational/irrational) discussion since the "value" of going to the show as opposed to selling the tickets is based on aesthetics.

[luckyme]

Your friend's point is a common one in that you'll have a $250 ticket in your hand when you enter the park, discounted slightly for the bother of selling it.

I bought a car, my mom gave me the exact car. Do you have to know which one is which before you can place a value on it?

I worked a couple hours for $100 and then found $100 on the beach. Is there a difference in the value of the bill? Will it matter if I switch them.

luckyme

[kerowo]

Value in this case is subjective. Going to the concert is worth the $200 extra you could get if you scalped the ticket so it is no more irrational to go than it is to buy a pair of pants.

[UpstateMatt]

[ QUOTE ]
Your friend's point is a common one in that you'll have a $250 ticket in your hand when you enter the park, discounted slightly for the bother of selling it.

I bought a car, my mom gave me the exact car. Do you have to know which one is which before you can place a value on it?

I worked a couple hours for $100 and then found $100 on the beach. Is there a difference in the value of the bill? Will it matter if I switch them.

luckyme

[/ QUOTE ]

I take your point, but i'm not sure they are analagous situations. I guess my thinking is this: is choosing not to profit (by, for instance, consuming a product that could be reesold for profit) equivalent to placing a value on something. I won't pay $250 to go to any concert, i'm pretty sure. But there are plenty of concerts I would go to if given free tickets, even i could make way more than $250 reselling the tickets.

I think this is actually a very common situation. I'm just not sure about how to think about it when i have to make such resale choices.

[luckyme]

[ QUOTE ]
[ QUOTE ]
Your friend's point is a common one in that you'll have a $250 ticket in your hand when you enter the park, discounted slightly for the bother of selling it.

I bought a car, my mom gave me the exact car. Do you have to know which one is which before you can place a value on it?

I worked a couple hours for $100 and then found $100 on the beach. Is there a difference in the value of the bill? Will it matter if I switch them.

luckyme

[/ QUOTE ]

I take your point, but i'm not sure they are analagous situations. I guess my thinking is this: is choosing not to profit (by, for instance, consuming a product that could be reesold for profit) equivalent to placing a value on something. I won't pay $250 to go to any concert, i'm pretty sure. But there are plenty of concerts I would go to if given free tickets, even i could make way more than $250 reselling the tickets.

I think this is actually a very common situation. I'm just not sure about how to think about it when i have to make such resale choices.

[/ QUOTE ]

On a gambling site, a more relevant example is the concept of 'gambling with the houses money' when you are up in a game of blackjack/roulette.

I tell my friends to cash out, go for a drink and a walk fondling the cash, then come buy the chips all back and sit down. Does it still feel like the houses money?
How long does it have to be legally yours before it is yours?

In your case, keep increasing the scalped value until it does mean something to you, perhaps that will clarify 'value, surely at some point you'll say "cripes, this is costing me $20,000 to go to this thing, fergitabotit" rather than treating it as play money.
If the entry could be gained by a ticket or a $250 gold nugget would you exchange you ticket then enter with the nugget? I'm not sure what you're seeing that I'm not ( I've allowed a discount of the 'bother' of selling it).

luckyme

[oe39]

what if you only had $50?

[ZeeJustin]

The situations are somewhat different since you profit less than $250 when you scalp the ticket (not only because you have to invest $50, but also because you have to invest time and effort). It's also illegal in some places.

But I tend to agree with your friend's general point.

It's similar to winning a satellite to a 10k event that you wouldn't normally play. You should sell the seat if at all possible if you weren't comfortable playing it in the first place.

[UpstateMatt]

[ QUOTE ]

It's similar to winning a satellite to a 10k event that you wouldn't normally play. You should sell the seat if at all possible if you weren't comfortable playing it in the first place.

[/ QUOTE ]

I think that's an excellent analogy. And I think it also provides an example in which most people are behaving irrationally.

matt

[T50_Omaha8]

Not enough inforamtion.

You currently have some certain budget constraint under which you live. Given this budget constraint, you will spend $50 to go to this concert but not $250.

When you buy the ticket, your budget contraint increases by $200. It is possible that under your new budget constraint you are willing to spend $250 to go to the concert.

As a starker example, let's say someone gives you $100,000 cash when you are considering going to the concert. This makes the $200 opportunity cost much less important, and greatly increases your tendency to go.

Thus buying the ticket increases your income, which makes all purchases less costly, which might just make the $250 concert ticket a rational buy.

This ignores the potential illegality and transaction cost associated with selling your ticket. This plays into your hands here.