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Model of the Valuation of the Synergistic Benefits of Being In A Relationship

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Written by ultrabeast   
Monday, 14 April 2008
Read something on this subject from a blog elsewhere... and what else could I do but to... (Just couldn't resist.)
And so, may I present to you my...

 
Quantitative Model of the Valuation of the Synergistic Benefits of Being In A Relationship

Ideally...
 
Being part of a relationship should offer all the advantages of singleness, but with the added _option_ of the benefits made possible by synergy when more than one party come together to pool their strengths. This is because efficiency and non-duplication of effort and the usage of resources are then seen in the areas where one or the other happens to have a higher competency in.
 
Ergo, savings should be gained in the use of effort, and other resources.
 
An 'option' cannot take on a negative value as holding the possibility, but not the obligation, to engage in something cannot be worth less than zero.
 
In effect, the above model implies that the best of both worlds can be achieved. In other words, one (both, actually) can have their cake and eat it too.
 
However: there is an important condition that is required for the model to work:
 
In other words, mathematically, as the holder of an option, the value of being in a relationship should not be less than the value of being single provided the below assumption is met:
 
  1. That neither party oblige each other to do things that they are not willing to do. In other words, before entering into the transaction - they must ensure that they are mutually satisfied with the terms of the other party as presented to them at this initial stage - and expect them as unlikely to change substantially over the course of time, as are written terms in a contract in any regular business agreement.
 
In those aspects that the other party has assumed no obligation to comply with, the first party should 'take care of themself' i.e. handle those aspects similar to what they would do had they remained single.
In which, this situation is no worse off than being single.
 
However -- in the areas that one of the parties has a competitive advantage in and henceforth agreed to take responsibility for, the handling of this area by the said superior party would bring mutual benefit to both parties, this is what constitutes the value of entering into such an agreement.
 
Take note that the validity of the above model hinges totally on this single condition.

 
Recognizing the extent of the terms and obligations right from the initial stage is essential as is recognizing the possibility of non-delivery of certain receivables. In this case, it is a standard prudent measure for the parties to recognize an allowance for non-collection. The parties involved should evaluate whether factoring in this buffer renders the ratification of the agreement infeasible. In which case both are free to assess other options in the market before entering into any obligations.

In practice, e
nforcement at a later stage to compel one party to comply are invariably difficult to carry out. The possibility of no fast, easy or inexpensive solutions has to be borne in mind.
 
This being the case, the onus is on the aggrieved party to have conducted adequate due dilligence when engaged in the evaluation stage of the suite of benefits as presented for their perusal during the evaluation period.
Although there may exist a moral and legal right to receive due compensation for services and benefits implied but not explicitly stated in the terms at the beginning, in practice, resolution is a long and arduous process.
 
As such, for prudence, the principle of 'caveat emptor' holds.


I would not yet include case studies, sample scenarios and practical examples here, but these are available upon request.

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