Straight Talk — “Free” Phone

Have a friend who brags about things they get for free? One of the common components of long-term contracts is that it includes a phone, but the price of the phone is often just built into the contract so the phone isn’t really free.

McDonald’s — Weak Dollar

In this commercial, office workers are lamenting the apparent weakness of the dollar relative to other currencies. Another worker comes by with a hamburger from McDonald’s $1 menu and the office changes their tunes when they realize that a dollar can buy a whole hamburger.

Ally Bank — Pony Commercial

This commercial is a great opening piece to talk about the differences between equity and efficiency. While both young girls are better off that before (efficiency improvements), they are not relatively better off because one is getting an actual pony (equity issues). One of the hard portions of this concept is to think about this issue as a true tradeoffs that efficiency gains often come at the cost of decreased equity. This increase in inequality between the two girls may be a nice, short way of demonstrating that tradeoff.

State Farm — Time Inconsistency

Time inconsistency is one of those economic topics that is quite easy to have a basic understanding of but quite difficult to understand full models that employ it. This video can be used as a lead in during a behavioral economics course or a microeconomics course that touches on behavioral economics.

Thanks to James Tierney for the clip and description

Ebay — 12 Days Commercial

 

One of the tough parts of buying Christmas gifts is that we don’t have perfect information regarding what the other person really wants. This issue often leads to us buying gifts for people based on what we think they’d like. This commercial from eBay points out that you can find a variety of gifts that someone would put on their list are low prices if you shop on eBay.

Wendy’s — Endowment of the Double Stack

 

An example of the endowment effect. The customer on the left is willing to give up a dollar but not his Double Stacker. This seems irrational as the Double Stacker only has a market value of one dollar. The endowment effect states that the possessor of a good over-values the good. This is illustrated in the commercial as the customer on the left refuses to give up his Double Stacker. For the classic coffee mug example, see Kahneman, Knetsch, and Thaler (1990).

Clip and summary provided by YouTube UserĀ chilibandito.

Centel Cellular — 1991 Commercial

Centel Cellular wanted to take customers in a bold new direction for communication. This ad is a lighthearted look at how far we’ve come since 1991. The amount of economic growth has been beyond most people’s imagination.

Axe Commercial

In this quick Axe commercial, we can observe both positive and negative externalities associated with cologne use. The original wearer didn’t realize the (good and bad) impact the second elevator guest would receive from his use of Axe Body Spray, and thus didn’t take that into account when he was applying it.

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