22 Jan 2015

Everyday bounded rationality

I took this photo at a California supermarket. It displays the price for a 24-bottle pack of Nestle water.

Let's figure out which price applies to you...

This 24-pack is...
$3.99 if you buy one with a loyalty card
$4.99 if you buy one without a loyalty card
$2.99 if you buy 5 packs (120 bottles) with a card

...but make sure you add sales tax (8 percent in this county) and CRV (bottle deposit), which varies by container size. I'm not sure, but I'd guess that a purchase of a single 24-pack, without card, would cost $(4.99*1.08)+(24*0.05) = $6.59, or more than double the screaming $2.99 price...

So, is this normal? Let's look at the Dutch version of things:

It says € 1.67 for 6 bottles of 500ml water, at a cost of € 0.56/liter. (I can't even tell how many ounces or liters comes with the 24 bottles above.) That's the tax and (no) deposit-inclusive price, btw.

Bottom Line: In some countries, stores sell you goods. In others, they sell you a bill of goods. Perhaps that confusion explains why Americans are so (fatally) abusive of drugs (compared to the Dutch).