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Message: [QUOTE="nzm136, post: 713397, member: 2531"] I want to clarify: my examples in the post that's two up are only illustrations. In real life, cable companies don't have data for every individual in a market. They have generic data instead. Their data might be something like: "*We are 95% sure that the market size is W million people, plus or minus X million *We are 95% sure that males 18-24 make up Y% of the market, plus or minus Z% *We are 95% sure that A% of males are single and/or the sole household decision maker when purchasing cable, plus or minus B% *We are 95% sure that the average male that's between 18-24 will pay is $A (plus or minus $B), the median is $C (plus or minus $D), the standard deviation is E (plus or minus ), and the yearly drift is G (plus or minus H)" They would then sub in a number for males who were the decision maker when buying cable and calculate the number of people who would buy at that given price and fill in that data where I have "Person 1." They would then do similar calculations with a number of other demographic groups (i.e. females 18-24 who were the sole decision makers) until they had a substantially complete picture of what's going on. They can determine this information through a variety of methods, including experimental markets and multiple regression analysis, customers surveys, "gut feelings" (which may or may not be accurate), and so on, depending on how much time and money they are willing to invest into an industry analysis. On a micro level, you individually, it isn't necessarily accurate, but on a macro level, such as your group as a whole, it can be VERY accurate. In other words, the problem of not being omniscient can be solved with industry analysis techniques, probability curves, and a working knowledge of statistics. Anyway, all that is beyond the scope of the conversation and really, really hard to explain over a message board. I only brought it up before someone challenged me on the fact that the people negotiating the contracts and determining the prices aren't omniscient. [/QUOTE]

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