Sunday, July 13, 2008

Economic irrationalities

There are some things that people do that simply don't make economic sense. As an ex-economics student and an employee of an investment bank, these things jump out at me...yet i wonder, could it be that hard for someone else to understand?

For example, just 5 minutes ago, about 5 people at borivli station declined my offer to liquid a partly illiquid asset for absolutely free!!!

Finally i had to buy my own coupon booklet....but i did manage to convert a good part of it back to cash by offering it to people standing at the end of the (long) ticket line.

Lesson to be learned: good ecnomics benefits everyone.

2 postscripts ;:

Ess Dee said...

You forget to take into account the opportunity cost of standing in line to buy the coupon booklet in the first place.

If you factor that in then perhaps to the average guy who travels by train often and hence has a coupon booklet will think that the booklet is worth more than it's face value in cash since it saves him from having to stand in the line?

Kris said...

hmmm...the average guy who travels by train often should have the sense to buy a railway pass...it takes 11 return trips to cover the monthly pass fare, and about 30 in 3 months for the quarterly.

for an occasional traveler like me who travels two or three times a month, it doesn't make sense to carry spare coupons around, because the booklet is fat and unwieldy in my wallet...and if i don't carry it wherever i go, it'll never be around when i need it. plus there is no line for coupons - you just shove 40 bucks into the counter and someone hands you the booklet back, irrespective of how many people are waiting in line for tickets. it actually takes atleast thrice the time to tear off the coupons carefully, await your turn at the machine and punch them :)