*In a healthy competitive market with a consumer-base that's well educated on potential consequences of their purchases.
I do agree with the principle that a space-hogging marginally profitable business is detrimental to a community. Just that the opposite is not necessarily true; profitability does not imply beneficiality.
Humans do not fit the model of "rational self-interested agent" commonly applied for economic models. Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product. That's a phenomenal waste of labor that favors only well-funded organizations practiced in deception. Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
> Humans do not fit the model of "rational self-interested agent" commonly applied for economic models.
They generally do -- the misalignment comes from analyzing people's behavior according to presumptive interests which have been externally attributed to them, instead of observing behavior in order to ascertain what people's interests actually are.
> Gambling and addictive substances are two hugely profitable business sectors that would not exist if it we're remotely accurate.
No, gambling and addictive substances exist because people enjoy them. Large numbers of people exhibit a manifest preference for short-term pleasure over long-term stability; expecting such people to act in ways that pursue long-term stability over short-term pleasure is itself irrational.
> I'll also preempt someone's inevitable assertion that the burden of verification should lie on the consumer. In informationally antagonistic environment, it's absurd to expect each individual to individually vet every service and product.
Unfortunately, your attempt at preemption has failed. Only the consumer has the relevant criteria necessary to determine how well a given good or service fits his own particular needs or desires. Being rational, most other people intuitively use the experiences and advice of others as Bayesian indicators of product suitability or unsuitability (even if they don't know what Bayesian indicators are), but they're still using those external resources as tools with which to make their own decisions.
> Any rational group would pool resources and have a single org do the research and share it with everyone. Oops we've reinvented a government.
No, you've reinvented Consumer Reports. Except for the "single org" part, anyway -- there's no single determination that could be applicable to all people all the time, so people will naturally develop a variety of parallel solutions that apply different criteria to the evaluation process.
I take it you view drug / gambling addicts not as people with a mental health issue making irrational decisions, but rather fully rational people that prefer "short-term pleasure over long-term stability"?
Absolutely. People make rational decisions to fulfill the motivations they actually have. But sometimes people, being complex creatures, have multiple conflicting motivations, where fulfilling one impedes another, which leads to psychological and emotional distress. So mental health does come into it, but as a matter of reconciling conflicting parts of ones own psyche, not as a matter of overcoming irrationality.
Or, to put it another way, the irrationality is a matter of having contradictory desires in the first place; choosing to act upon one and dismiss the other resolves the irrationality. The fact that some people make the trade-off in the opposite direction that you would doesn't make them irrational, it just demonstrates that people are different.
I disagree... the diff lies in the definition of "humans" vs. "group". It's like the quote in the movie MIB "Kay : A person is smart. People are dumb, panicky dangerous animals and you know it"
No, it does not. That the users end up paying more in no way means or should be implied that they _choose_ to pay more.
If cheaper options are made less accessible or clearer, and customers are intentionally mislead to more expensive products, as a result they will pay more too.
Also, there is a cost associated with searching. Consumers may intentionally forego the effort for perceived low marginal gains (especially in nominal rather than percentage terms, e.g. "I'm not going to waste my time to save a quarter." even if the quarter is a significant percentage difference). This is one of the factors in the success of Amazon. People "value" convenience.
But people will not pay more than a product is worth to them. The fact that they are willing to purchase the product at a higher price point indeed does imply that that price point is still lower than the consumption utility of the product for them.
Do you always click in paid ads before the organic results? No? Oh because you personally don't prefer them? Oh you mean they're preferred by the minority that does click ads, over alternative paid ads?
