Hall’s Rule of Social Order – #188
People’s willingness to pay a price defines market price, and that line is always being tested.
This is probably more of an obvious one, but the social implications are severe, in my opinion. There are two evils at play here. The first, a common negotiation strategy is to ask for twice of what you really want. If I say I want $10 for this shirt, but I only need $5 to make a profit, the buyer can put in work to cut the original $10 price tag in half, feel like they’ve got a huge deal, and as the seller, I’m still happy. Sellers will always push the boundary of what a consumer will pay, and as long as people keep dishing out the cash, prices will continue to grow with greed. Think of the auction houses or even antique road show. They just come out and say, this is worth $10,000 at auction, but they’re really just setting the standard for something that may not even exist. As long as someone is willing to pay that, it will sell.
The other problem is more of a social norm issue. The longer prices go unquestioned, the less of an issue it is perceived to be. We all don’t like paying $5 a gallon for gas, but what can we do to stop it? There’s enough political power in play that companies like Exxon are posting their largest profits ever, but the price at the pump continues to grow. Investors are making a killing in the stock market because people keep seeing other people make huge amounts of money driving up the cost of oil. Gas might be too big of a topic to be a good example, but even with the other side of of consumerism there are examples. Everyone is fine paying $1.40 for a burger, until McDonald’s comes up with a dollar menu. Now all the fast food joints are making dollar menus to stay competitive, because people are slowly seeing they can get something cheaper than what they’ve been paying.591 views