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"I tell everyone I'm going to buy 15 SUV's" - Open Knowledge — LiveJournal

Sep. 7th, 2001

02:00 pm - "I tell everyone I'm going to buy 15 SUV's"

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Matthew Rabin, an economist at Berkeley, won a MacAurthur "genius" award for his work on human irrationality. Here's an excerpt from a nice profile of him:

Rabin uses a simple example to illustrate one of the many consumer
habits that is left out of most economic profiles of buyer
preferences: people's strong desire for immediate gratification.

"If you ask someone if they'd rather have $10
now or $15 a week from now, a lot of the respondents would say they
wanted $10 now. If you then ask them if they'd rather have $10 50
weeks from now or $15 51 weeks from now, everyone will say they'd
rather have the $15 51 weeks from now," he says. "People have
self-control problems and they will cave in to immediate
gratification. But you don't find that psychological factor in the
economic models of our buying habits."

Comments:

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From:klarfax
Date:September 7th, 2001 04:26 pm (UTC)
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You have some really interesting stuff in here!
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From:crasch
Date:September 8th, 2001 03:50 pm (UTC)
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Thanks!
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From:pjammer
Date:September 7th, 2001 04:38 pm (UTC)
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Interesting that economists persisnt in modeling humans as wholly rational consumers/utility maximizers in the face of rather eccentric and utterly self-defeating behavior in terms of impulse control. I've seen similar types of study that confirm the conclusions about human psychology.
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