Economists researching Ebay auctions found "45 to 50 percent of eBay auctions exceeded the 'buy it now' price"! (I'm not making this up) This irrationality has been well understood since Roman times, thus the title of this post. How little we seem to have changed...
Considering its prevalence, it's myopic to dismiss this irrationality as merely stupid. Analysis of consistent errors, however basic, can be instructive.
Looking at another example, suppose you were in a game show. There are 3 boxes, (A,B,C), one of which holds $1m. The other two, hold nothing. Choose which box you think wins the $1m.
Make a choice now.
While I'm confident that my prediction regarding your choice will be accurate, let's add a layer of complexity. Suppose I now tell you that the $1m is not in box X, where X is one of the two boxes you did not pick. Do you want to change your original choice box?
(Answer here)
No comments:
Post a Comment