Theory of Rational Expectations
by David Merrill on February 3, 2009
As the global economy continues to erode, many governments turn to stimulus plans to jump start their economies. On a morning read of the pros and cons of economic stimulation, I came across this theory (you may recall from your college econ course) on the Theory of Rational Expectations.
Economists who believe in rational expectations base their belief on the standard economic assumption that people behave in ways that maximize their utility or profits. Let’s apply this theory to Storage Economics for a moment:
- Do you believe that the price of storage acquisition will continue to price-erode at the current rate over the next few years?
- How do you forecast the storage demand growth that users and business will demand?
- What understanding of total costs (labor, floor space, maintenance, migration cost, cost of waste) and the need to reduce those costs will impact your strategic plans for the next 1-2 years?
- What expectations exist related to data management, lifecycle, retention, and data security?
Bottom line is that acquisition cost reductions alone will not meet current (or future) IT budget reductions. The total cost model is essential to factor in increasing demand in capacity and demand in storage and data services.
