What is the appropriate response when someone says “Thank you”? Most Americans would answer, “You’re welcome.” And in most situations that is the expected reply. But in some circumstances, the appropriate response to “Thank you” is another “Thank you.” When? After people have concluded a commercial transaction. The salesperson says "Thank you," and I reply, "Thank you." And that makes perfect sense. When one person gives another a gift, the recipient has given up nothing, and thus deserves no thanks. But voluntary commercial exchanges are generally mutually beneficial. Both sides gain, and this symmetry makes it sensible to have both parties give the same expression of gratitude.
(Giving credit where it’s due: I heard someone make the same point a long time ago, but I honestly can’t remember who. I think it might have been Walter Williams.)
Saturday, February 07, 2004
The Linguistic-Economic Interface
Can’t … resist … tasteless … joke …
Just came across this article with the headline, “Infant dies after surgery to remove second head.” I guess it just goes to show… Two heads really are better than one!
Friday, February 06, 2004
Snowclone Wars
J-P Stacey despises my word coinage, saying it’s “redolent of William Gibson and other ‘writors’” and sticks out like “a chart R&B song in my CD collection.” I decline to defend myself. Instead, I’ll defer to Mark Liberman’s response: “I'm just a bystander here, but if I were Glen Whitman, I'd be happy to be classed with William Gibson and chart R&B songs.” Well, I could do without the chart R&B songs, but William Gibson’s no slouch. He coined the word “cyberspace,” after all.
Thursday, February 05, 2004
Cutting-Edge Marketing Strategy
I heard this on the radio, but I can't find a source online. Dunkin Donuts plans to adopt a bold new marketing plan to compete with the likes of Starbucks. It will offer coffee and cappuccino at reduced prices, in sizes called "small," "medium," and "large."
This Is What Happens When You Have Group-Based Rights
The Pechanga Indian Tribe is trying to squeeze out some its members, saying their claim to Pechanga heritage is dubious. Of course, the remaining 90% of the tribe will get a larger share of the tribe's casino revenues.
Tuesday, February 03, 2004
Thanks, Bro
Neal's two-week guest stint is over, but I'm sure he'll return sometime soon. I've enjoyed his contributions, and I hope y'all have as well.
Monday, February 02, 2004
Choice Comments
Tyler Cowen and Will Wilkinson both have interesting comments on the growing “choice makes people unhappy” literature. Both Tyler and Will point out that, if your choice set really is too large to sort through at low cost, then it pays to have people who will do the sorting for you – editors who select the best articles, waiters who tell you the best items on the menu, etc. I made the same point about a month ago. Will adds that the need for editors creates new entrepreneurial opportunities for those who can do the most effective job of helping others narrow their choice sets.
Although sometimes presented as evidence against the standard microeconomic theory of consumer behavior (and possibly all rational-choice theories), the “choice makes people unhappy” literature doesn’t really shake my confidence in economic modeling. It just changes my assessment of the relative importance of different economic models. The usual static choice model, in which a consumer just chooses the highest-utility point available in a completely known and well-defined choice set, has always been a simplification. For some contexts, it’s an innocuous simplification. In other contexts, particularly those with a greater informational burden, other models must be brought to bear, the most obvious being search theory (as Will indicates).
I’ve long thought that search theory deserves greater play than it gets at present. It’s been applied extensively in labor economics (for job search), but its use elsewhere is more limited. I’ve been working on a search theory of suicidal choice for a while now, and long-time readers may remember my search theory of romance. Search theory also provides the utility-maximizing explanation of satisficing. What I haven’t seen yet, but would very much like to see, is a thorough reworking of basic consumer theory along search theory lines. (Please email me if you know of anyone who’s working on this!)