Just say no extra money

I once lived in Rochester, New York, where there are regular cleaning your car in the five months of winter is essential (for some it is almost a religion). So much salt is a corrosive on the road, muddy salt water will be established at any time snow spread.

Snow and a lot of  near my house is a super-liar car wash, neon trim. It has two bays, and offers all the extras. You can easily drop $ 25 a wash there, but it is about the best deal. How is this possible, because there are other, less fancy nearby car wash, no fee will be almost as much? What seems to be why not a rip-off and other washing propaganda fancy place?

Know-how – it has an economic justification, I’ll discuss in a minute – is just saying no. Like this:

” You want to clean the wheels.”

“no.”

“no.”

“How to varnish?” “Amazon carnauba wax?”

“No.”

“Triple corrosion protection?”

“No, just the basic wash, please.”

For sixty-seven dollars, I got a good car wash to remove the brine and get rid of the two-tone look – the salt up to the mid-door, the actual color of the car from there on. My car is not fleeting, clear coat and wax from the glittering luster, but there are also those costly additional equipment I paid for them and bring salt false sense of security.

When I went to pay extras wash only buy the bare bones, save a lot of money, I transformed from a myopia , as a experience, according to Harvard economics professor David Laibson now an economics professor at New York University, Xavier Gabaix. In my car wash, for example, in many other cases of consumption, the occurrence of two kinds of exploitation, according to Laibson and Gabaix. In the first, the business use of consumer myopia who can not seeThey were charged ridiculously high price extras, to pay hidden fees or commitments for future costly repairs. Often an underrated loss leader – – second, mature consumers simply buy basic service use. While ignoring the extras   professor pointed hotels as a typical example in the paper Sincerely, build in 2006 ( “shrouded property, consumer myopia, but in a competitive market to suppress information”). Consider a hotel room in order to provide consumers with $ 80, cost $ 100 to supply, but room service, parking big price increase, of course, mini bar. Myopic consumers get $ 80 room, but pay so many actors, this hotel is far more than the cost of $ 100. In the sophisticated consumer, however, paid only $ 80, grab a hamburger on the street, skipping minibar, save big.

Laibson and Gabaix also noted that credit cards provide bonus miles, but with higher interest rates and hidden fees, and require expensive ink cartridges cheap HP printer. As credit card fees hidden in small print, cost information from the HP printer ink is a lot of clicks of the home page.

What is the cause of consumer myopia, and how do you avoid it? Laibson says it comes down to short-term thinking, this is how we are wired. “Of all the animals, which is something that is near the top of the mind, which is far from being concentrated in the way of things,” Laibson said. You see this often when people buy a car, just focus on price, rather than the future cost of maintenance, he added. So, be sure you move the patients with myopia (ie, sucker) category, taking into account all future costs, as well as extras with purchase.

But you must be aware of them first. In a free market, you would think that competitors will seek advantage by exposing these high premiums. In some cases, this happens. But in other cases, the professor speculated, it is best for everyone (except myopia, of course) to keep the information shrouded.

Think about it: if you run a hotel, receive a fair price, without expensive fare, what would be, if you advertise your competitors lose money by charging a high premium-priced rooms and pull customer results out of all the actors? You just educate customers, they are the best to go to your competitors, rather thanBuy tidbits. Therefore, economically speaking, it makes sense that business information is suppressed. Let’s face it: if not for patients with myopia, sophisticated consumers may not like the bargain pricing basis, whether it is .