08 June 2012

Convex beer and pizza

Economists have codified what appears to be a universal human taste, i.e., our "convex preferences" mean that we like to consume a mix of items (beer and pizza, fast but comfortable car, etc.) instead of 100 percent of an item.

The implication is not just that people need the freedom to consume a mix of items (not all or nothing) but also that it's good to hedge your bets -- don't put all you eggs in one basket.

Does this make sense? Can you give a counter-example of when you wanted only one thing for the duration of time that you had access to other substitutes or complements to that thing?

4 comments:

  1. Everytime I try to think of a single preference activity, I think of its pair (e.g. running... while listening to music; reading the Economist.... while drinking coffee; Blogging.... while drinking scotch). Interesting implications...

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  2. I partly disagree.
    If I buy a pair of running shoes I would not buy another pair of slightly different shoes (substitute, ie same category) until it would no longer meet my needs. Might go for a pair of padded socks though (complement, different category).
    Substitutes or complements are always available. At one point, you have to make a choice. Otherwise, it's consumerism.

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  3. @Anon -- ONLY running shoes? No boots? No flip flops?

    @Richard -- you ONLY "consume" girls? :)

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