Life in Pieces — Discounts & Sunk Costs

 

Tim tries to host a guys night and things don’t seem to be going his way. Beyond the awkwardness of just the two of them, the big pay per view fight lasts only a couple of seconds. While the two did get to watch the fight, which had a knockout, it wasn’t quite worth the hundred dollars they paid. Tim notes that he may be able to turn it off and get his money back. With a lot of experience goods, it’s not necessarily the actual outcome of the action that people care about. Tim and Matt did see a fight, so why is he so focused on getting his money back?

A second quick econ line occurs later when they sit down for dinner. Even though Tim isn’t eating any tacos, he notes that the cook is cheaper since he expects Matt to eat 25 or 26 tacos. This form of bulk discounting represents second degree price discrimination. With this pricing mechanism, the hope is to induce customers to purchase more than they would have (law of demand) even though making an additional taco doesn’t have the added cost of another cook.

Brooklyn 99 — Monty Hall Problem

 

Kevin and Ray haven’t seen each other in a while because of their scheduled change and come to a disagreement on the famous Monty Hall problem. Captain Holt believes the probabilities should only be 50/50 since there are two doors remaining, but Kevin, correctly, informs him the odds are 1/3 that you selected the correct initially and 2/3rds that it’s in the other door.┬áThe Monty Hall problem has also been covered in the movie 21 and the TV show Numb3rs.

Thanks to James Tierney for the recommendation:

Young Sheldon — Go for it!

Young Sheldon teaches his family about the statistics behind going for it on 4th down. A lot of football fans believe you just have to punt, but studies by economists like David Romer show that it’s often better to go for it on 4th down than to punt. The famous Pulaski Academy coach who never punts became a bit hit after being interviewed by ESPN. The NY Times even created a Twitter bot that would tweet about whether teams should punt or go for it and the bot tweets during NFL games.

Numb3rs: Monty Hall Problem

Charlie teaches his class “Math for Non-Mathematicians” the Monty Hall problem, where a game show contestant must decide whether to change their minds if given the option of 3 cards.

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