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I remember this being an example of human irrationality in economics so I asked chatgpt. (your utility from the exact same good shouldn’t change depending on w

I remember this being an example of human irrationality in economics so I asked chatgpt. (your utility from the exact same good shouldn’t change depending on where you buy it from.) Seems like it has the same issue as humans do: > Pretend we’re two friends and we’re at the beach. You give me money to buy you a beer. How much would you want to spend? Chatgpt: I would want to spend around $5 for a beer at the beach. Me: What if I could the only place selling beers is a fancy resort? It’s the same beer though. Chatgpt: In that case, I would be willing to spend around $10 for a beer at the fancy resort. It's still the same beer but the location and atmosphere of the resort may justify the higher price.

lossolo 4y ago
That's a bad example, it's fully rational and chatGPT gets that "It's still the same beer but the location and atmosphere of the resort may justify the higher price.", you are not paying only for beer there, you have location and atmosphere included in that price, that's why alcohol price is so high in night clubs. You can go buy the beer and go home or you can go to fancy resort and drink beer there, experience will be different and that experience is included in the price of the beer.
- bilsbie 4y ago
  Not sure if it was clear but the friend is bringing you the beer. So you wouldn’t experience either location. The end result would be identical.
  - LarryMullins 4y ago
    The language model wants to spend $5 on beer but is willing to spend up to $10 if you give it no other choice. It understands a beach resort with a local beer monopoly is probably charging more, and correctly explains why that is. Seems mostly rational to me. The irrational part is where it didn't answer the initial "How much would you want to spend?" query with a preference for free beer. The thought of paying less than $5 for beer apparently didn't occur to it. Maybe it's snooty.
astrange 4y ago
> (your utility from the exact same good shouldn’t change depending on where you buy it from.) It's rarely the exact same good in real life. (If you like a bar you'll accept higher prices because they fund the bar. If you like an artist you'll buy their merch over a different artist even if they're the "same thing".) Of course this is true for things like grocery stores, but if you see someone doing this in real life you should assume they have a reason for it.

lossolo 4y ago

That's a bad example, it's fully rational and chatGPT gets that "It's still the same beer but the location and atmosphere of the resort may justify the higher price.", you are not paying only for beer there, you have location and atmosphere included in that price, that's why alcohol price is so high in night clubs. You can go buy the beer and go home or you can go to fancy resort and drink beer there, experience will be different and that experience is included in the price of the beer.

bilsbie 4y ago
Not sure if it was clear but the friend is bringing you the beer. So you wouldn’t experience either location. The end result would be identical.
- LarryMullins 4y ago
  The language model wants to spend $5 on beer but is willing to spend up to $10 if you give it no other choice. It understands a beach resort with a local beer monopoly is probably charging more, and correctly explains why that is. Seems mostly rational to me. The irrational part is where it didn't answer the initial "How much would you want to spend?" query with a preference for free beer. The thought of paying less than $5 for beer apparently didn't occur to it. Maybe it's snooty.

astrange 4y ago

> (your utility from the exact same good shouldn’t change depending on where you buy it from.) It's rarely the exact same good in real life. (If you like a bar you'll accept higher prices because they fund the bar. If you like an artist you'll buy their merch over a different artist even if they're the "same thing".) Of course this is true for things like grocery stores, but if you see someone doing this in real life you should assume they have a reason for it.