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The rational answer is that if you would drive 30 minutes to save $50 off a $300 tablet, then you should also drive 30 minutes to save $50 off a $1000 tablet. Y

The rational answer is that if you would drive 30 minutes to save $50 off a $300 tablet, then you should also drive 30 minutes to save $50 off a $1000 tablet. You've described the psychology of why a wealthy person might not drive the 30 minutes for the $1000 tablet well (but still will spend the time to save money on the $300 tablet), but that choice is still irrational.

rdiddly 9y ago
Well yes, it's completely arbitrary! Those with the luxury to act irrationally will sometimes do so, I guess. And economics doesn't do a good job of explaining it, so the root of this branch of the comment tree was kinda right when they said traditional economic theory is a ass.[0] Adversity and scarcity breeds a precision and a ruthless attention to detail that prevents that $50 from escaping. Meanwhile abundance leads to a relaxing of all such, and maybe even a dulling of that skill. Being born into wealth I imagine would put you at an even bigger disadvantage in that regard... though I might be okay with having such problems... [0] I'm paraphrasing of course and I changed Law to Economics. http://www.bartleby.com/73/1002.html http://www.bartleby.com/73/1002.html
- tylerhou 9y ago
  The reason why people act irrationally has more to do with psychology than economics. Vsauce has a good segment talking about human tendency to think in terms of proportion instead of absolute scale: https://youtu.be/Pxb5lSPLy9c?t=1m53s https://youtu.be/Pxb5lSPLy9c?t=1m53s
keenerd 9y ago
It can still be rational, but you need to look at shopping as an aggregate of probabilities. Let's make it more extreme. A $50 item for free or $50 off a $5000 purchase. Discounts as big as 100% off don't come every day. Maybe you'll never see that deal again in your life. You should jump on it. Where as a 1% discount is something you see every day at dozens of stores. There will probably be a bigger discount next week, so don't bother going out of your way. If you have to make a choice between the two, you choose the item with the less-common discount.
- Buge 9y ago
  You're thinking that the question is "should I this item or not", or "should I buy this item now or wait a while". Then it could be logical to prefer the higher percent discount. But that's not what the study asked. The study said "you need to buy this item now, where will you buy it?" In this case it is illogical to prefer the higher percent discount, dollar value is the only thing that matters.
morgante 9y ago
That is too simple of an answer, as it ignores the added utility from getting a "good deal" on the tablet. People feel good/smart for finding good discounts and they can even brag about the great price to their friends. Without that added utility, saving $50 alone might not be worth 30 minutes to them.

rdiddly 9y ago

Well yes, it's completely arbitrary! Those with the luxury to act irrationally will sometimes do so, I guess. And economics doesn't do a good job of explaining it, so the root of this branch of the comment tree was kinda right when they said traditional economic theory is a ass.[0] Adversity and scarcity breeds a precision and a ruthless attention to detail that prevents that $50 from escaping. Meanwhile abundance leads to a relaxing of all such, and maybe even a dulling of that skill. Being born into wealth I imagine would put you at an even bigger disadvantage in that regard... though I might be okay with having such problems... [0] I'm paraphrasing of course and I changed Law to Economics. http://www.bartleby.com/73/1002.html http://www.bartleby.com/73/1002.html

tylerhou 9y ago
The reason why people act irrationally has more to do with psychology than economics. Vsauce has a good segment talking about human tendency to think in terms of proportion instead of absolute scale: https://youtu.be/Pxb5lSPLy9c?t=1m53s https://youtu.be/Pxb5lSPLy9c?t=1m53s

keenerd 9y ago

It can still be rational, but you need to look at shopping as an aggregate of probabilities. Let's make it more extreme. A $50 item for free or $50 off a $5000 purchase. Discounts as big as 100% off don't come every day. Maybe you'll never see that deal again in your life. You should jump on it. Where as a 1% discount is something you see every day at dozens of stores. There will probably be a bigger discount next week, so don't bother going out of your way. If you have to make a choice between the two, you choose the item with the less-common discount.

Buge 9y ago
You're thinking that the question is "should I this item or not", or "should I buy this item now or wait a while". Then it could be logical to prefer the higher percent discount. But that's not what the study asked. The study said "you need to buy this item now, where will you buy it?" In this case it is illogical to prefer the higher percent discount, dollar value is the only thing that matters.

morgante 9y ago

That is too simple of an answer, as it ignores the added utility from getting a "good deal" on the tablet. People feel good/smart for finding good discounts and they can even brag about the great price to their friends. Without that added utility, saving $50 alone might not be worth 30 minutes to them.