>Homo economicus assumes that the utility of the person is reflected in price optimization.
>Homo economicus assumes that the utility of the person is reflected in price optimization. But obviously only price optimization between two identical bundles. It only says we'll pick the lower price between bundles A and B if we have the same valuation of them. You may be confused because often intro econ textbooks assume that the marginal value for something never goes negative. But that assumption is broken here. Chicken nuggets do not have a consistent per-nugget valuation. When purchased ten at a time, they are more valuable per nugget than when purchased twenty at a time. To such a degree, clearly, that even when the twenty nuggets are costed at a much lower unit price they are less attractive. There are actual challenges to homo economicus and the assumption of rationality, as in this paradox: http://www.thebigquestions.com/2010/10/12/how-rational-are-y... . But the chicken nugget result is not one of those challenges.
Posted by savanaly on Jun 28, 2015, 12:35 PM
Tags
Related issues
Raise real-world problems, find people facing the same issue, and discuss solutions.5,500 issues0 comments
pricing (Other)
Here in Argentina we are in permanent summer time GMT-3 since a long time, but we should be in GMT-4.
NewYou should do some basic research yourself.
NewWell, actually not.
NewI have a 2022 mini that I use constantly.
NewTwo observation: 1.
NewCautiously optimistic for them.
NewI have two televisions - living room TV with an AppleTV and bedroom TV with some Roku device.
I hate that they claim the pricing like that.
>Homo economicus assumes that the utility of the person is reflected in price optimization.
>Homo economicus assumes that the utility of the person is reflected in price optimization. But obviously only price optimization between two identical bundles. It only says we'll pick the lower price between bundles A and B if we have the same valuation of them. You may be confused because often intro econ textbooks assume that the marginal value for something never goes negative. But that assumption is broken here. Chicken nuggets do not have a consistent per-nugget valuation. When purchased ten at a time, they are more valuable per nugget than when purchased twenty at a time. To such a degree, clearly, that even when the twenty nuggets are costed at a much lower unit price they are less attractive. There are actual challenges to homo economicus and the assumption of rationality, as in this paradox: http://www.thebigquestions.com/2010/10/12/how-rational-are-y... . But the chicken nugget result is not one of those challenges.
Comments (0)
No comments yet. Start the discussion.