Many people in our society invest in bonds. Perhaps you, reading this article, have invested in bonds at least once and are still investing now. Bank deposits are a form of bonds, just not labeled as ‘bonds.’ When you deposit your money in a bank, the money isn’t considered bank money. Interest is paid because the money isn’t withdrawn immediately. When you withdraw your deposited money, the bank must return the principal plus interest. This is essentially a bond. However, the only reason this differs from bonds as an investment asset is that these bank deposits are not traded on the market. If bank deposits were traded publicly, the interest rate would be evaluated in comparison with other deposits, even if the principal remains unchanged. Valuation reflects opportunity cost. This is the transaction value of bonds. When goods or assets are traded in the market, their value is re-evaluated. The core of value is comparison, and the tool for valuation is opportunity cost. That’s why CEOs...
In 2002, Nobel Prize-winning economist Daniel Kahneman conducted an experiment called the “Dictator Game”. It was 1986. One of the two subjects was given $20 to share with the other. The first condition was that the recipient could exercise his veto power if he did not like the distribution ratio, and then, the ruler ensured that the giver did not have the money. The second condition eliminated the veto. In the first condition, most people who gave money were divided in half. In the second condition, however, the giver had about 70% and shared only 30%. Most people think of fairness to vested interests between 50% and 70%. But, in some cases, even though the recipient had a veto, the giver had 90% and wanted to share only 10%. At that time, it was beneficial for the recipient to receive at least 10%, but by exercising the veto power, the giver did not have the money either. This is the moment of conflict between justice and rationality. People do not make decisions based on reason alon...