If you told me I had a 35 percent chance of winning a million dollars tomorrow, I’d try to sell you my chance for 349 thousand dollars.
Very interesting, thanks.
I am pro-breast feeding but skeptical of the IQ claim. Can you link the study?
My guess is they compare the avg IQ to the average of a selection of people who breast feed.
I would expect this to be subject to selection bias.
The school of thought shminux represents, though not popular in the main stream, is one I ascribe to. Bryan Caplan and a few others have books on the subject.
Shminux, this though is exactly why I see this group to be of value. I don't want to spend a lot of time doing research. I want to examine three peoples strategies and trust that I can blindly go with the suggestions, or at least have a strong starting point.
Interesting read, thanks for the post.
"compliance costs vs. the risk of paying more taxes" -- This is why I use health savings accounts and commuter plans as an example.
"myopic" consumers -- There really are no individual consumers there are transactions. Myopic transactions perhaps would be a better description. On aggregate we have lots of myopic transactions. (bounded rationality) To answer you question -- I agree with you second part on myopic's but don't see how it is a problem for G&L. Sophisticateds are the ones driving the evolution of the system.
First thank you for the thoughtful response. This is more what I was hoping for when I posted... I don't agree with you signaling story but it is something I would not have considered.
"price discrimination" I don't think this is at all a story of signaling. I think it is a story of information/time costs.
My stories: If my wife picks up the circular at the store entrence and tells me that if I rip out this page an hand it to the cashier I will save a buck I do so. Most people don't do their health savings accounts or mail into NYC to have their metro cards mailed to them so they can save a few bucks by deducting the cost. Do you think most people pay more taxes then they need to because they are signaling? Tell me your signaling story.
To the paper being convincing. Be specific. I bet that your story will involve agents who can not defect or some external structure which alters incentives. My story is very close to that of the paper. That people who care "sophisticated" will prefer systems in which they can obtain an advantage.
I'm expanding the strict definition of price discrimination by including taxes ect but believe they are the same. By doing so I think it can be seen that price discrimination is a supply and demand side. In addition I would argue that because I am talking about systems that it is an emergent phenomena. Agents within a system shroud. Does your car mechanic or IT guy tell you the exact truth or do they pad things just a little. Do teammates working on a project ever slack but make it look like they are doing work?
made article more clear by adding /institution.
Because when in doubt go with convention.
I think there is a lot we don't understand.
Now if my wife found it bothersome perhaps we would not follow convention, but so far it she likes doing it. From a fathers perspective it is vastly superior due to the ability to leave a bottle out of the refrigerator for 6 hours instead of 1.