Posts Tagged ‘Economics’

Monday Medley

What we read while remembering old acquaintances, to be contrarian…

  • The second season of Portlandia debuts on January 6th. Margaret Talbot writes about Carrie Brownstein for The New Yorker, and Vulture interviews Brownstein and Fred Armisen.

An Alternative View from the Wing (and the hotel bed)

I never watch Larry King. If I were to have a dishonorable mention for retiree of the year, King would be it. Yet, recently while staying in a hotel, I watched nearly ten minutes of Larry King. I have other more systematic preference shifts when in different contexts. On airplanes, I almost always order tomato juice despite rarely ordering it on the ground.*

*I do remember taking a flight once in which they oddly took the drink orders before the plane left the ground. After regaining my composure, I believe I opted for no drink.

This phenomenon of changing preferences with changing environments is not limited to me. A German study found that tomato juice is incredibly popular on airplanes, for example. And, apparently, Ginger Ale is also disproportionately popular on airplanes.*

*A quick Google and Google Scholar search did not reveal anything on the hotel television preference issue. There is plenty, however, on Larry King’s awfulness.

Now, a shift to some classic economic theory: revealed preference theory holds that a consumer’s preferences are revealed by their behavior, or purchasing habits. So, if a woman usually buys two apples each week rather than two oranges, the revealed preference theorist would say that she prefers the bundle of two apples.*

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Symposium: Delusional Anchoring

I maintain that John’s use of anchoring is, in fact, delusional.  John saw one free comedy show (ASSCAT at the Upright Citizens Brigade Theater, in case you were wondering) that he really enjoyed.  The guest monologist and the cast of the show change on a weekly basis, but for the purposes of this argument I’ll assume that the show is very good on a weekly basis.

John should have a willingness to pay for comedy shows independent of the actual cost of a particular show. So, let’s say his willingness to pay for a “really good” comedy was $15 before he saw any comedy show. Then, he goes to UCB and his willingness to pay drops to zero (well, it’s actually higher than zero because of opportunity cost and cost of travel…). This does not make sense unless John is the most risk-averse person in America. The fact is reviews and friends’ suggestions are imperfect but we use them anyway because they have some use. Gran Torino, for instance, got very positive reviews but based on what the reviews were praising, it was very clear to me that I would not like the movie (I did not see the trailer). Likewise, I trust the judgment of certain friends on particular topics more than others (I generally do not trust Tim, for instance, when it comes to french fries).

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