Just a quick post to link to the Freakeconomics blog via the NYTimes...maybe I should have you guys reading some of this...
Remember Mankiw and his principals...people respond to incentives.
http://freakonomics.blogs.nytimes.com/2007/08/23/cheating-to-be-hot/
Have a great weekend!
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8 comments:
That article was quite funny, I liked the way it presented the issue of incentives and cheating, and when you think about it,it's true, generally the smaller the chances are that you'll get caught, the greater the incentive for cheating is. Likewise, the greater the punishment for cheating is, the more incentive u have to not cheat. When it mentioned the rigging of the campaigns, the fact that such a procedure can be done fairly anonymous online is a great incentive for cheating on such issues, even if it was something fairly small like the example it put in the article.
Basically, with incentives consumer reactions can be predicted fairly easily. The more incentive there is for a certain action (such as buying a certain product), the more likley a consumer is going to do that.
I loved Freakonomics-- those guys are geniuses. If you haven't read the book, in the article he mentioned the non-cheaters who buy bagels. Explanation: A guy places baskets of bagels in office buildings every morning, and there is a trust payment system. Most people deposit their $1 into a box, but you can walk away without paying. So you CAN cheat, but the price is so low that most people don't. That's where incentives for cheating can depend on the reward-- or what's at stake. One thing is a bagel, another is the hottest media band, like the article mentioned.
By the way, they announced that there will be a sequel to Freakonomics.
When there's no control on cheating, then logically people will cheat because it's going to give them more by doing less.
This got me thinking..
If there's no punishment for cheating... is it considered cheating?
If you think about many laws and rules that were set up not long ago, you wonder about what happened before those rules existed; it wasn't really illegal to do it. you can consider it to be wrong or to be bad but it's not breaking any rules.
I wouldn't necesseraly call it cheating, I'd call it taking advantage of what's not prohibited.
Many fortunes were made this way, by using these boosts to give them money, things that were later banned.
innnnnterestingggg hahahaha...it was a very entertaining way of applying economicss!! :D tyler thank u for summarizing the bagel story...well i thoguht it was interesting how the subtitle of the bagel story is "an accidental glimpse at human nature". because the whole incentive issue which luisa explained very well basically all sums down to human nature: its the way we are! give us incentive and its more likely we'll do it. give us bigger consequences its more likely we won't do it. economics is very insightful on human nature in that sense :)
i just saw zeke's comment..well i think that if there are no laws against an action, its not cheating. its just...being smart? haha. if its not prohibited its technically not..i think
LoL well i agree with ezequeil and debora about how it's not considered cheating when there's no law against an action. However, it's hard to judge because cheating is like doing something out of the way it was supposed to be, or plain dishonesty which is practically wrong although there might not be a rule stating that it is.
jajaja. this article was funny. i can see where if their are incentitives for example if you dont pay for the beagel you go to prison...then i think people would pay for the beagels, but when their is no punishment or guidelines to what is considered right or wrong people will just act based on their own morals. so they arent really cheaters or wrong for ripping people off...because if the guy who left the beagels everyday had the incentitive to earn every dollar for each beagel in the basket he wouldnt just leave the basket without supervising who took each beagel out.
Wow, interesting article. And thanks Tyler for explaning the bagel example. There's a similar situation at my grandparent's church in the U.S. You can get daily devotional books with a $0.50 donation. The incentive is VERY small, and people could easily walk away, but because it is in a church I'm sure most people abide and pay the small fee. A lot of the time, the reason people do cheat or lie is because they have no incentive not to. Why tell the truth when you know you won't get caught lying? Incentives, if managed correctly, are a great way to regulate laws and rules. Like the HOV (High occupacy vehicle) line in the states - a huge fine definitely keeps people from illegally using it. Singapore is a country known for its incentives. Most people have seen the shirts and know Singapore as the country with all the laws. If you chew gum and spit it out somewhere, you get fined. If you liter, you get fined, etc. It is a fairly clean country/city because people know there are consequences. A similar situation has taken place in England. They have video cameras in public places that can see you liter and will tell you to not liter, or to pick up your trash. When people know they are being watched, they will most likely chose not to commit a crime.
In conclusion.. great article, brings up a TON of topics!
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