Economic Analysis of Business Practice
I look forward to contributing on this shortly.
The goal of chapter 2 of our text, Managerial Economics by Froeb, McCann, Ward, and Shor, is to teach individuals how to find and profitably exploit money making opportunities.After watching the video titled "Economists Help Humans Get Dates", it is clear that economists probably saved Cupid.com from going out of business. Economists hired by Cupid.com suggested maximizing the number of date requests allowed by men on the on-line dating service. This sent a clear message to women that the men could now only send a limited number of date requests and that those requests must be serious ones. Men could no longer ask every woman who was a member of the service in hopes that finally one would agree to their request. In other words, the economists helped Cupid.com move assets in a low-valued use and moved them to a higher-valued use. The services offered by Cupid.com were now seen as valuable by its members. Prior to the cap, the company was headed toward financial ruin.Brian Carney, Managerial Economics, Dr. Singh, Empire State College
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I found this video to be very interesting. I did not know that economist were the people behind the scenes to make Cupid.com, Amazon, Nameyourprice.com (Priceline.com) and Google Search Engine a billion dollar companies. I was intrigue about the idea that the two economists came with for Cupid.com. They used “artificial scarcity”. Women were being inundated with requests men were making. In order to make the company successful, they limited the women resource for men to choose from. Men were now reading women’s profile instead of looking at their pictures. Men were investing time to find a compatible woman. Another concept that the economist used was “conditional price offer” to making Nameyourprice.com (Priceline.com). They realized if everyone named the price they wanted to pay for a hotel or flight, they would “free”. To prevent that they came up the conditional price offer. They made sure that the consumer took their bid seriously that they would be bound to pay. Economics can be used by business people to spot money-making opportunities (assets in lower-valued uses). That’s what these companies did. (Managerial Economics, Froeb, Chapter 2).Suzette Monteverde, Empire State, Dr. Singh, ECO-65155X
I agree with Suzette and was flabbergasted that economists were the individuals behind the success of the company's mentioned in the video such as Cupid.com, Google, and Priceline.com. In my opinion, I believe that by implementing a restriction to Cupid.com saved the business. When male users realized that they were limited in who they could reach out to made them take their search much more serious by looking further than just a profile picture. In addition, I believe that when users are looking for compatibility over looks will also help the business and industry be successful. What I also found interesting in this video was the economists and engineers solution to Google to get rid of the "Winners Curse." They mention that Google was going door to door in the beginning to obtain advertisers which did not seem to work. They came up with an automatic system to auction off the placement on the right hand side of the search page which the winning placement would be the second highest price plus one penny.Michael Frequenza, Empire State, Dr. Singh, ECO-65155X
I enjoyed this video; it was a great way to connect economic principles to every day concepts. I never knew that there was an economist beyond priceline.com. It was a great way to transition into auctions. I personally have felt the sting of the winner’s curse. I have felt sometimes when I have bid on EBay that I have had overbid so now I wait until the last few seconds to bid or I just buy on Amazon. It wasn’t until I took ESC’s economics class and read this text book that I ever gave auctions of any kind a thought!
I (or I should say my wife) have sold many items on E-bay. I find it interesting to look around sometimes just to see what people are selling. When you type a city name often you find old postcards and pictures, I just don’t understand why someone would want an old postcard addressed to someone they don’t know. I can’t say that we have made a fortune but we have had some good runs buying from estate sales and selling on e-bay. From a seller’s point of view, the second price auction has its drawbacks. You may know on E-bay you enter your max price, if you put in $20.00 and the next highest bid is $12.25, you are winning the auction with a price of $12.50 (or whatever the minimum bid is over the second price). Someone goes to $13, you go to $13.25. Someone goes to $21; it’s theirs at $20.25. This can help eliminate the winners curse. Unless you change your max bid, it can’t go over your desired highest price. I also have a couple of items I have “won” in a live (in person auction), the couple of time I went to one there was not many people in the room. I could not help but feeling that there were people working for the auction co. that were bidding up the items - bid rigging. So, I started bidding on items I did not want (risky – yes), and abruptly stopped bidding when who I thought was rigging the price had the lead. I think it helped because I got a great rug for a great price.
I found this video very interesting. It opened my eyes to the many auctions I have either been involved in or encountered, some of which I was not even consciously aware of, as being auctions that is. I actually met my boyfriend of 4 years on a dating site, one that did not limit the number of offers to create artificial scarcity, but what a great concept to encourage both parties to take the offers more seriously. I usually just ignored most of the offers and took my time to read the ones I found interesting. The name your own price idea is genius. It causes the person bidding to make a serious offer, which if they are smart they will do their research prior to making that offer, but it also locks them into that price should Priceline accept it. However, the best idea I heard, and read about in our text, was the second-price auction. In fact, I am a huge fan of eBay and use it regularly. I just never put a name to what I have been doing on there for the last several years. I love the thrill of swooping in on the last few seconds and putting in my highest offer. Sometimes I win, and even at a much lower price, and sometimes I lose. But by waiting until the last few seconds I don’t allow myself to get caught up and bid higher than I really wanted to just because I want to win. Just a little game I play with myself so I don’t get carried away, which I’m sure many do!Froeb, L., McCann, B., Shor, M., & Ward, M. (2014). Managerial economics: A problem solving approach (3rd ed.). Australia: South-Western Cengage Learning.
Interesting video! Very informative. It is amazing how the internet dating and the use of "scarcity of resources" helped Cupid.com and other dating sites to survive. It was interesting that it was economists that helped them to solve that problem. I also enjoyed learning about the auctions with google and how they prevented the "Winner's curse."It is amazing how fart the internet has come and how much still needs to be done. I am sure that economists will still continue to streamline the internet in many ways.
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