Valuation of Parking Space

There’s a unique problem in my apartment building – the building has been built with provision for only seven parking slots in the basement but each of the nine houses here has been allotted a slot, which means there are two obstructing slots. Unfortunately, my slot is at a location where I get blocked by the car belonging to the guy upstairs and so I’m a directly affected party due to this problem.

Currently I’ve managed to get around this problem by parking my car in some corner of the basement but neighbours are cribbing saying it spoils the “look” of the building (as if the look of the basement matters! ).

Coming back to the problem, I was wondering if there exists a solution. Clearly, the shape and orientation of the basement means that not more than seven cars can be parked there in a non-obstructing manner. Now, since every houseowner here was allotted a slot when the building got built, they are entitled to a slot so it is not feasible to request/tell someone to rent their house to someone who doesn’t own a car (2 bedroom houses with parking slots cost some 2 kilorupees a month more than those without parking slots).

Thinking about it, the only solution I realized is by trading a parking slot among affected parties. For example, the slot of my house (B1) is obstructed by the slot belonging to the C2 house. Now, what if my owner tries to buy out C2’s parking space? He can either buy it out outright or he can pay the owner of C2 a monthly fee in exchange for C2 not letting out his house to someone with a car.

And he gets compensated for this by charging a higher rent from me (note that if my landlord buys out the c2 slot, I effectively get two slots, since both belong to me, there is no obstruction). The key to this, however, is the relative pricing of various parking slot combinations.

The key equation is this: if Pn is the monthly rent of a house in this building with 2 bedrooms and n parking slots, then there is a profitable trade between the owner of my house and the owner of C2 if and only if:

P0 + P2 >= 2 P1

If the above equation doesn’t hold, the amount by which my owner gets compensated (by me) for the second parking slot will not suffice to pay the owner of C2 to not let out his house to someone with a car, so the trade I described above cannot take place.

But then, according to Coase theorem, irrespective of initial allocations (here C2 has a parking slot that blocks B1’s slot) there exists a trade in which each party gets the desired outcome. Is there a contradiction with the equation I’ve written above?

Now, thinking about it, the value of both my house and C2 is not actually P1 but a number P1′ which is less than P1. P1′ takes into account the pain of having an obstructed parking slot (I get pained because I can’t take out my car when I want; C2 gets pained because I disturb him every time I want to take out my car), and so effectively both my house and C2 would be overvalued if we were paying a rent of P1.

And if we take P1′ into consideration rather than P1, I’m sure the following equation holds:

P0 + P2 >= P1′

The only other problem here is that when taking a flat on rent, you are unlikely to check for details such as if your parking space is blocked, so it is likely that the deal will take place at P1 rather than at P1′. However, once you move in, you figure out the pain and the owner of the apartment will feel the pinch when his tenants clear out at a rate faster than he would’ve expected which ends up reducing his long-term average rental income. And the deal I described above will take place if and only if he figures out why the fair value of this apartment is P1′ and not P1.

What’s your Raashee? Astrology and Vector Length

The problem with western astrology is that there are way too few categories of people according to it. Western astroogy uses a vector of length one – the part of year in which you were born in, and then concocts a story based on that. According to that, people can be classified into twelve categories (as can be seen in the great recent movie whose title is a substring of the title of this blog post) and you can tell their story based on that. Thing is that way too many people you know, and are not like you, are in the same category as you, and this makes things so much less believable.

On the other hand, the beauty of Indian astrology is the vector length that is involved with it. There are nine planets (including the Sun and the Moon, not including the Earth, and with Rahu and Ketu instead of Uranus and Neptune) and at the time of your birth, each of them can be in one of 10 houses (not sure of the number but I think this is it). There are correlation issues so the number of possible combinations isn’t as big as you think it might be, but still there are enough possible combinations that can describe each person you know uniquely!

This ability to identify almost each person uniquely is what makes Indian astrology so fascinating. Stuff is so complicated that you will never understand it. And because you will never understand it, you are more likely to believe it; unlike in western astrology where it is easy for you to see where you fit in, where things are so easy that it is easy for you to see through it.

The other thing about Indian astrology is that given the really large number of variables, it is easy for the astrologer to correct his own mistakes. He will say “Jupiter is in position 7 so X will happen” and then if X doesn’t happen he says “yeah i predicted it based on Jupiter being in 7, but then in the meantime the Sun moved into 8, and so death happened off”. It makes things so easy to cover up that it contributes to the mystique, and to the success of the art.

So a possible moral of the story is that if you want to create fraud frameworks, make sure that they involve long vectors. Make sure that you design them in such a way that the mango person won’t understand; Make sure that you build in enough variables that will allow you to cover up in case when you screw up. Make sure the vectors in your framework are long enough to make the users feel special and unique, yet giving them a feel that you’ve seen someone/something similar before.

I think this is what all the successful consulting firms have done. Perfected this art of coming up with this kind of a vector. And to think that they might have been inspired by Indian astrology..