This has been going around the Internet for the past couple of days…(HT to Gizmodo and others…)
My first thought was “the guy on the right must be an economist.” Also, I’m surprised that no one popped up to offer $52. The comments on the sites that were running this, however, got me thinking a little more. Some observations:
- I initially thought that this was a very low reward offer, but then I noticed that it was for a lost iPod Touch rather than a lost iPhone. I would probably offer a reward higher than MSRP if I lost my iPhone, since I am terrible at backing up phone numbers and such. (Ah, the value of information. I also get confused when people offer rewards for lost dogs that are lower than what it would cost to buy a new dog. Aren’t you people willing to pay more to specifically get YOUR dog back???)
- This is a good example of what social scientists sometimes refer to as “sunspots” – why do people usually pick such round numbers? I mean, there’s little stopping someone from offering a reward of $68.24. The Internet has pointed out that, as such, people for the most part assume that the $50 offer is the real one, both because it’s a round number and it’s the lower of the two bids. But how do we know that the real person didn’t offer $51 and the imposter offered $50 to try to make it seem like she was the real iPod owner? (Note that if people were solely going for the reward rather than being nice people, this would be a non issue, since the highest bid would win and undercutting would be pointless.)
- I conjecture that the $50 reward is the real one because it has a name attached and the other does not.
For the record, this is my iPhone (and my living room rug):
It has been like this since last April- I ran the entire Boston Marathon without dropping the thing and then faceplanted it on Clarendon Street 10 minutes after I finished. Luckily, I was too tired to care. (And yes, it still works just fine.) As an economist, I point out to people that I am happy with this setup because it doesn’t bother me much and it greatly reduces the likelihood that anyone is going to try to steal my phone. Perhaps if the thieves understood more economics, they would realize that I would probably pay a decent amount to get the information back if nothing else. I think this is the first time I’ve ever been glad that some people don’t understand economics. 🙂