The Denomination Effect

To a rational decision-maker, the possession of $20 translates exactly to the ability to buy $20 worth of goods. The form of the $20 should not matter—whether it is one $20 bill, two $10s, four $5s, twenty $1s, or any configuration of change, the purchasing power is the same. However, humans are rarely perfectly rational, and this case is no exception. In the event that a person is given $20, that person is more likely to spend it if it is given in smaller denominations (for example, $1 bills or change) than if it is given in larger denominations (especially Continue reading The Denomination Effect

Post-Purchase Rationalization

Imagine this: A customer walk into a store looking for a new coat. In this store, she has two coats from which to choose. They have a few differences: they are each a different color, say green and blue; the blue one is made from thinner material; the green one has a larger, more obnoxious logo; the blue one has smaller pockets; the green one is a bit more expensive. Eventually, the customer decides she just has to pick one, so she does. Imagine she chooses the green one. Later, she wonders if she made the right choice, if she Continue reading Post-Purchase Rationalization

Comedy of the Commons

Overfishing. Pollution. Littering. All of these are ways in which society as a whole misuses common resources (in these cases, animal populations, the environment, and public spaces). These resources are all subject to a phenomenon known as the Tragedy of the Commons, a situation in which everyone has an incentive to use as much of a shared resource as possible but no one has an inherent incentive to maintain it. Fixing the problem involves individuals making decisions that make them worse off while everyone else benefits. Take littering in a public park as an example. Say there are 100 people Continue reading Comedy of the Commons

Self-Interest vs. Selfishness

Economics—as a field of study and as a way of thinking—has a reputation for selfishness. In large part, this can be traced to the idea that people always have their own best interests in mind and make decisions in accordance with these interests. This idea is an important part of Economics, and is introduced early to those who are entering the field, but it is by no means a complete understanding. Unfortunately, it has a tendency to be treated in popular opinion as though it is a complete understanding; as a succinct description, rather than a simplistic summary. Moreover, it Continue reading Self-Interest vs. Selfishness

Thesis Corner: Madeleine Elliott

Welcome to Thesis Corner! This week, I am writing about my own thesis, using the same questions I asked Max last week. Q: What was my thesis about? A: I wrote about the Economic development of Seattle and Tacoma in the 1890s. I specifically focused on the Klondike Gold Rush and a few economic circumstances which may have influenced the cities’ differing responses to the Gold Rush. Q: How did I decide on this topic? I started thinking about my thesis toward the end of the spring of my junior year (spring 2017). I knew I wanted to research something Continue reading Thesis Corner: Madeleine Elliott

Thesis Corner: Max Coleman

Welcome to Thesis Corner! This week I spoke with graduating senior and former Sound Economics writer Max Coleman to talk about his thesis. Q: What was your thesis about? A: I wrote my thesis about agricultural contracting in the hop market. So hops as in Humulus lupulus, which is what they use to flavor and preserve beer. Q: How did you decide on this topic? A: My family grows hops, and originally I was like What would be useful to actual real life? I didn’t have an area of study that was calling out to me, so I was like Continue reading Thesis Corner: Max Coleman

Progressive Item Distribution in Mario Kart

Here is a scenario, which is likely to be familiar to anyone who grew up in proximity to any generation of Nintendo gaming console: You are playing Mario Kart. Whether expectedly or unexpectedly, you find yourself in first place. You keep going for item boxes, and keep receiving more or less useless things like a single mushroom (or, most recently and most infuriating, a single coin). Suddenly, out of nowhere, a blue shell hits you and you are passed by both the second and third place racers before you can start driving again. It’s not fair! Blue shells are the Continue reading Progressive Item Distribution in Mario Kart

$70 for Cardboard

Recently, Nintendo announced the upcoming release of an add-on for its most recent gaming device, the Switch. The accessory pack is known as Nintendo Labo, and it’s… made of cardboard. Yes, that’s right. Cardboard. The idea is that users will be able to build physical objects that change the way they interact with the Switch. For example, the informational page on Nintendo’s website advertises the ability to create a piano, a fishing pole, or a motorbike, among other things. Each of these new “Toy-Cons,” as Nintendo calls them (a modification of the term Joy-Con, the name given to the Switch’s Continue reading $70 for Cardboard

The Cost of Making Judgements

Most people probably know this feeling: a movie makes hundreds of millions of dollars at the box office, even though you did not like it; a painting sells for a record amount at auction, but you cannot tell much of a difference between it and its contemporaries; radio stations keep playing the same five songs even though there are plenty of others that are just as good (if not better); something becomes popular and you just don’t get it. It is easy to make this complicated, to assume that there must be something in the subtleties of the popular thing Continue reading The Cost of Making Judgements