Today is my last day in my flat as Tim's flatmate. Tonight Richard will be moving in. I shall miss Tim very much as he's as rare as gold dust; Tim is a great flatmate.
This is why I have decided to live on my own in Birmingham for the first 6 months. If one imagines obtaining the perfect flat as maximising one's utility (which I suspect may not be pareto efficient, but who cares about others innit), and if it is possible model the quest for utility maximisation, it would be as such:
And as you can clearly see from the above, variable (flatmate) is the only exogenous variable for which I cannot control, and what I cannot control upsets me.
Thus if I omit the variable (flatmate) I will have more control over my utility, and though it will not be maximised, marginal externality caused by the utility gap will be worth the reduction in the level of stress which I may or may not experience with a flatmate.
From the equation above we can clearly see that the error term u' > u, but this is ok, because I have decided to settle for less.
Of course, I have no idea if the above regression model is linear (I can only assume it has to be) or if my preference (or time-preference) will vary as I place emphasis on difference priorities, but as of now I shall ignore that.
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