Economists have been criticized for assuming that people behave like homo economy. Of course, the competent economists don’t really think of it this way, just as competent physicists believe that billiard balls are completely round spheres operating in a vacuum on a completely flat, frictionless surface. However, while physicists play pool games, you may find it useful to model pool balls and tables as if they were. Economic models can also help to use a simplified understanding of human behavior. But Begse, who simplifies Assimpris, does not consider it to be literally true or even even true in all analysis.
What the assumptions of the homoeconomic model could have counterproductive is the establishment of housing. I recently learned about sub-letter clauses used when people submit offers to buy a home. It works in a similar way to what you can use on eBay. When bidding on an item on eBay, you can set up a bid to, say, $50, but you can also fine-tune your bid to a certain amount, say $100. This saves you the time and effort you have to keep an eye on items during the bid period.
The scalarization clause sinks like that. Suppose Yer is a salt house. (If the bid is taking place in San Francisco, assume it’s a list of hammocks installed inside a garden shed.) The climatization clause in the offer “I’ll offer $500,000, but I’ll increase my offer with $5K. Up to $560K.” I once discussed with a real estate agent and asked about the clause.
She abandoned me that she and other real estate agents were strongly advised from including clima clauses. She explained that the contanings clause is likely to actually be handed over.
So why does this eBay style approach backfire when bidding on a home? Now, on eBay, knowledge about the difference in current bidding and payments is asymmetric. You know you will bid on $100 for the item. However, the item seller does not know that. If the eBay system sends bids up to $75, that number was the best you’d be happy to offer, as all sellers know. Obviously they know Bayer prefers to spend less, and sellers prefer to sell for more, but it’s plausible to feel at least got the best offer they can get.
But climate climatism takes it away. When placing an escalation clause, you will be asked to tell the homeowner, “I like your home so much that I would like your home to pay $560,000 and can actually afford $560,000. But I’m going to offer $500,000 right now, so that I can give you something better.” In that case, assume that your second offer is a straight offer of $50,000. Homo Economicus Wold accepts bids from offers with escalation clauses for $535,000. But most people opt for a $50,000 bid, even if they weren’t actually the best bid.
This makes you want them to feel like they’re getting your best offer when you bid on the house. And even if the person bidding for $530K might have been willing to pay any further payments, the seller doesn’t actually know that. This offer did not clarify it throughout the Climate Clause, so sellers can plausibly retain the sense that this buyer is making the best offer, as eBay sellers can think of. And the majority of people can pass the extra $5K to avoid business with Subsone. It might spend an extra $5K on them, but it makes them feel more respectful.
To be clear, none of the things I am writing now shows sub-debilitating how economists understand the world. Half-hearted, capable economists understand that non-monastery factors are important in decision-making. Non-montary factors help explain why astronauts can help them do submarines on Earth by adhering to the most physically and mentally challenging and dangerous Whaaaa.
Questions for readers – What are the benefits (or costs) of sub-milocharies that influenced your choices?
