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Thoughts from New Orleans
By Chris | December 16, 2007
I’m done with my first semester of graduate school and am spending the day in New Orleans before driving with my brother back to Idaho. We visited Bourbon Street last night. What a place. Drinking in public is allowed (no glass containers though), and it was really interesting to see the disparity in prices between drinks to go and drinks in bars with free live music. Almost none of the bars have cover charges. Instead, bars have a one or two drink minimum to enter the establishment. And, drinks in these bars are pretty pricey. I paid 12 bucks for a Budweiser and a Corona. You could have purchased three times the alcohol to go from a street vendor. The high beer prices pay for the music and environment while rationing seating during peak times. On off days like today (Sunday) 3 for 1 specials are abundant. Psychologically, consumers seem to prefer high prices and occasional discounts to lower prices and occasional surcharges (covers).
Speaking of psychology, I’ve been reading Blink by Malcolm Gladwell. He discusses an economist and psychologist who run a speed-dating service in New York. They have the daters fill out a survey on what characteristics they value in a potential date before participating. They are later asked to evaluate the people they just met on the same characteristics. It appears that the personal characteristics people say they value in others aren’t the characteristics present in people they end up picking. For example, beforehand a women may say she is looking for a smart and sensitive guy. But, later she will choose to meet guys that she ranks as funny and extroverted. What is the women really looking for? The economist, Raymond Fishmond says, “The real me is the me revealed by my actions. That’s what an economist would say.” It’s definitely not that simple. A person’s choice is dictated by the structure of the dating game. Matchmaking services online likely result in more pairings based on prior preferences. The nature of the internet probably diminishes the allure of those characteristics that are attractive in the moment. Incomplete information about the dating games available and the way our own mind works means that there is more to utility then just revealed preference. When preferences aren’t consistent over time, how can we compare them?
Note: I’m writing this from a coffee shop without prices on the menu: an interesting strategy that puts me in a dilemma. I’m not sure if the pleasure I’ll get from the cupcake will exceed its costs. It’s awkward to ask how much it costs. My brother offers to pick up the tab; I order the cupcake.
Topics: Economics, Updates | 2 Comments »
December 17th, 2007 at 12:16 am
So, did it turn out that the cupcake worth its price?
I arrived in NYC today, and went to a fancy Chinese restaurant in Manhattan for dinner. After finishing the chapter “Eat well, banana aside” on the plane, I took all the responsibility of ordering food on my shoulder, instead of asking “what is the best?”, I asked the waitress:”What is your best spicy dishes?” (both of my friends are interested in hot food)…In the end, we really enjoyed the food there and plan to go again sometime next week.
February 19th, 2008 at 2:57 pm
The cupcake scenario reminds me of a baffling menu item I once saw at an outrageously expensive restaurant. To give you an idea of this place, appetizers were about $20 each. The lobster entree said “market price” with an asterisk indicating “financing available.” I nearly laughed out loud, but it was clearly not meant as a joke.
But it makes me wonder: What kind of consumer goes to a ritzy restaurant where the cheapest entree is $50, and then opts to finance the lobster?
I should add that my friend’s dad selected the restaurant. He also generously paid the bill.