Thursday, July 02, 2015

The Stupid Rich

Interesting piece from the Richmond Fed

A search-theoretic model features buyers’ ability and willingness to shop around as an explanation for price dispersion. In this new model, motivation to shop around or not shop around doesn’t matter. All that matters is that some people do and some people don’t. And this likely leads to price dispersion.

Description from web site:
For many years, economists have observed substantial and pervasive price dispersion — wide variations in price for the same product. Some economists have attributed price dispersion to "ignorance in the market," a lack of information among buyers and sellers. More recently, economists at the Richmond Fed and the University of Pennsylvania have developed a model that combines price dispersion theory with intertemporal price discrimination theory to suggest that buyers' differing ability and willingness to shop around might explain price dispersion.

This could bring on buyer's remorse, of course.  UNLESS you are one of the stupid rich.


1 comment:

Gerardo said...

I think my mama mentioned something to me about this.