A microeconomic case study of seeking close to ordinary life

finishing date: March 3, 23

Is the cherry a lemon? This may sound a little strange, but in fact it is a (small) allusion in the development of economics, and it is quite interesting ... < P > In 197, Professor Akalov, an economist, published a paper to discuss the characteristics of the used car market. Because the owner of the used car has used the car for a period of time, he knows the performance of the car very well, but most people who buy the car can't judge the quality of the car. Therefore, the seller and the buyer have different information, that is, there is an "information asymmetry" between them. Moreover, cars with good performance are usually not willing to sell, so most of them are sent to the used car market with problems, mostly some "lemons" that make people grin.

Since buyers and sellers have different information, lemons are mostly used in the used car market. Therefore, even if someone wants to buy a car and someone wants to sell it, they may not be able to negotiate a deal in the end. There is no transaction in the market.

The example of the used car market deeply reflects the key influence of "information" on market transactions. This is a direct impact and challenge to the concept that some people want to buy and some people want to sell in the market, which was regarded as the standard by economists at that time. Therefore, Akalov's groundbreaking paper has become one of the important classics in economic literature.

The characteristics of lemon market are not only interesting in academic discussion, but also enlightening our daily life.

Washington State in the northwest corner of the United States is rich in cherries, and the products are sold in all states of the United States. Cherries are big and small, big and beautiful and delicious, and the price is relatively high. Therefore, cherries can be selected according to size first, and then sold according to specifications and grades, each leading the way. Of course, cherries can be picked or not, and the picked cherries are "sold in grades" according to their size; Those that have not been picked are "mixed for sale" in different sizes. However, picking cherries requires manpower and material resources, and the skill of screening for beginners and experienced ones is quite different. Therefore, cherry merchants will decide for themselves whether to bother to pick cherries. After a period of development and exploration, the cherry merchants in the producing area have become two types: the first type does not pick cherries at all, and all cherries are "mixed for sale"; On the one hand, the second type of businessmen will pick cherries, on the other hand, they will also let some batches of cherries be mixed and not picked.

Good grades of cherries can be divided into different grades in terms of price, but what about those "mixed" cherries? Since the seller of cherries knows the quality of these cherries, and the buyer of cherries may be in Boston, new york, thousands of miles away, there is also information asymmetry between buying and selling. Will these cherries, like Akalov's "lemons", be treated equally because they are all "mixed" and have only one price?

However, when you think about it, the "mixed" cherries sold by the second type of merchants are actually a little different. Since these businessmen can pick them instead of picking them, it is probably because they see that these batches of cherries are not good in color and are not worth picking. Therefore, both are "mixed" cherries, and the "average quality" sold by the second type of merchants is likely to be worse than that sold by the first type of merchants. If this inference is true, the price sold by the second type of merchants should be lower than that sold by the first type of merchants, who are both "mixed sales" cherries.

two American economists analyzed more than 1 trading data in 1983, and they found that the price of the second type of merchants was "indeed" lower than that of the first type of merchants, both of which were "mixed for sale". That is to say, in the case of unequal information, the market has developed a function to distinguish the quality of cherries according to the "signal" that these "mixed cherries" are from the first or second class merchants. Therefore, after such a discussion, the two scholars concluded that "cherries are not lemons"! At first glance, this sentence seems a bit absurd, but if you understand the twists and turns behind it, I am afraid you will smile and nod.

for economists, the conclusion that "cherry is not lemon" proves once again that market functions can distinguish the power of competition by their own strengths and needs at the meeting of supply and demand. For ordinary consumers, the inspiration of this allusion is that as long as the market plays a role, the quality of goods can be roughly judged from the "price". Moreover, the deeper meaning is that everyone can actually try to become a (small) market, cultivate their own judgment, and then consider the choice and ask for more happiness. Think about it, why do you "always" go to fixed fruit stalls, grocery stores, hospitals and restaurants? Did you also find some "signals" and develop some judgment? ......

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Author: Xiong Bingyuan

Source: Selected from The Tale of the Lighthouse by Xiong Bingyuan. No matter whether it is the winter of March 9 or the scorching sun, there are always a group of "seat-occupying people" who are faithfully waiting in front of the teaching building with books in their hands. As soon as the door is opened, they rush into the classroom, see the seats, and hastily put books and other things on the table. Only then can they breathe a sigh of relief and guard their "colony" proudly. Later people can only look at the seats and sigh, ranking second. The audio-visual effect of the class was greatly reduced, so I could not help complaining and shouting "unreasonable seat occupation".

the author believes that from the perspective of economics, when we assume that all people are rational people, rational people pursue the maximization of interests, and the system itself does not involve moral issues. If the designation of a system can meet the pursuit of maximizing the interests of rational people, it will not only achieve fairness and justice in the universal sense, but also be a reasonable system. Below, the author will use the principles of economics to analyze the rationality of seat-occupying behavior.

occupying a seat-the choice of a rational person

What does "occupying a seat" mean? It means that you can have a seat that satisfies you, you don't have to cran your neck to catch every movement and every look of the teacher through many obstacles, you don't have to pick up your glasses and bother to identify the blackboard, you don't have to cran your ears for fear of missing something, and all this means that when you are as attentive as your classmates, you can concentrate more easily, get better listening results and finally get better grades, and all this is just because you occupy a good seat.

Of course, there is no such thing as a free lunch. You need to pay a certain price for occupying a seat. You may not be able to stay in bed for a while, and you may not be able to have a leisurely breakfast. They are the opportunity costs you pay for occupying a seat. The key lies in which is the opportunity cost and the income. For a student, the significance of getting good grades is self-evident, and when you look at them with a positive attitude, the above opportunity costs can be completely reduced to a small or even negative value-getting up early is good for health and energy, but it is unnecessary to waste time on breakfast. From this point of view, the opportunity cost you pay for occupying a seat is very small, but the income you get is much greater, so occupying a seat is undoubtedly the best choice for rational people.

occupy a seat for others-rational people consider marginal quantity

We find that those students who occupy seats often occupy seats not only for themselves, but also for their roommates. Of course, this may indicate that these students are more careful and thoughtful. However, from the perspective of economics, it contains the principle that "rational people consider marginal quantities".

when you have arrived in the classroom ahead of time, it's just a little effort for you to take up an extra seat. There is almost no marginal cost here, and what kind of marginal benefits will this behavior bring? First of all, your roommate may think you are considerate and improve your evaluation; Secondly, even if the person you serve doesn't think this is a manifestation of virtue, but regards it as an investment, then he will certainly pay a certain degree of reward for it under the principle of equivalent exchange in appropriate occasions.

this kind of situation is called "accommodating people" by the people, which is small and profitable. Why not do it?

Fixed occupant-Give full play to the comparative advantage to make the trading group profit

If you need one person to occupy the seat every day in your dormitory, is it better to take turns for different people to occupy the seat every day, or is it better to have a fixed person to occupy the seat? The answer is the latter. This embodies the economic principle that people play their comparative advantages, create value, and trade with people with other comparative advantages, so that all parties in the transaction can benefit from it.

it's not necessary to take turns to occupy seats. everyone's income has not changed. the problem is that different people have different opportunity costs in this matter. Xiao Wang is used to going to bed late, so getting up half an hour early is tantamount to torture, and barely getting up to complete his "sacred mission" may lead to listlessness and yawning all day. On the contrary, Xiao Li is used to getting up early, and occupying a seat is a breeze for him. Xiao Zhang can not only get up early, but also has an advanced means of transportation-bicycle, so it is easier for him to occupy a seat. In the comparison of the relative advantages of the three, Xiao Zhang, Xiao Li and Xiao Wang. Then when making a choice among the three people, Xiao Zhang is undoubtedly the most suitable, while Xiao Wang may use the time of staying up late to fetch water for everyone, and Xiao Li may use the time of getting up early to buy breakfast. So they give full play to their comparative advantages, and as a result, the whole trading group benefits from it.

seat rotation system-the advantages and disadvantages of another system design

People who attack "seat occupation" often point out that seat occupation violates the principle of fairness, and everyone should have equal opportunities to occupy a good seat. So they put forward a system that they think is fair-seat rotation system, that is, everyone is seated by number and transferred row by row every week.

The advantages of this system are that, firstly, it is highly operational, and at the same time, it provides people with clear expectations. You don't have to worry about occupying a seat, because the seat is waiting for you there, so you can arrange your time more flexibly. Secondly, as its supporters say, in the long run, everyone has the opportunity to get a good seat (and certainly a bad seat), thus achieving a superficial fairness.

the disadvantage of this system is that it is very likely to lead to inefficient results, so it deviates from the principle of fairness in essence. First of all, because it is mandatory rather than based on the free choice of individual will, there will be two situations. On the one hand, those who give some seats the highest evaluation will not get the seats, on the other hand, some people may have low evaluation of these seats because they are not interested in this course. As a result, these seats can't exert the greatest effect on them, and even lead to unnecessary loss of resources due to their absence. The emergence of this trend is just like the contrast between the poor and the rich. Can you say that this is fair? Secondly, the seat rotation system obviously makes it impossible to realize the benefits of all kinds of seat occupation mentioned above.

to sum up, it is not difficult to find that the disadvantages of the seat rotation system outweigh the advantages, and the fundamental reason for its inefficiency lies in its violation of the principle of competition. Examining the "seat rotation system", we will find how similar it is to the thinking mode of planned economy, and the lessons of economic backwardness brought by decades of single planned economy tell us that the concept of competition must be strengthened.

using "administrative" means-overcoming the inefficiency of seat occupation

So far, we have seen all kinds of advantages brought by seat occupation. However, in the specific implementation of this system, due to improper use, it may also cause inefficiency. Therefore, we still need to discuss the suppression of this inefficiency.

For example, if the class starts at 8 o'clock and the building door opens at 6 o'clock, because of the competition, it means that the occupant must arrive before 6 o'clock, which increases the opportunity cost of occupying the seat and affects people's profit. Therefore, under certain circumstances, when people think that the opportunity cost exceeds its income, they will withdraw from the competition, which makes the advantages brought by seat occupation not be brought into play. What's more, because someone is bound to hold his ground, and this determined person, as a rational person, will strive to expand the income in order to make up for this increased opportunity cost. Because there are no other competitors at this time, there is no limit on how many seats he wants to occupy, so he has formed his monopoly on seats, and those who speak highly of seats still cannot get seats, which leads to inefficiency and unfairness. So is it necessary to limit the number of seats occupied? The answer is no and impossible (because no one can supervise how many seats it occupies). In fact, just adjust the opening time. When it was adjusted to half an hour before class, this situation was effectively curbed because of the intervention of a large number of competitors.

Another example is that some people have occupied their seats for a long time, trying to do it once and for all. The measure to deal with this behavior is to take back their books before opening the door to ensure that everyone has an equal opportunity to compete.

In a word, just as the government intervenes in the "market failure" in the market, adjusting the seat occupation system by "administrative" means can also play a positive role.

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Author: Zhang Lixin

Source: Peking University Law School.