Principles of Microeconomics Kafu Wong微观经济学嘉富黄原则.pptVIP

Ka-fu WongUniversity of Hong Kong Invisible hand theory and information The invisible hand theory assumes that buyers are fully informed. Given that consumers are not fully informed, they must employ strategies for gathering information. Example 13.1. Searching for a racquet Example 13.1. Searching for a racquet Example 13.1. Searching for a racquet Example 13.1. Searching for a racquet The free-rider problem and fair trade laws: Manufacturers may want to maintain minimum resale prices so that their retailers can earn enough to provide good service. Without resale price maintenance, consumers can shop at a full service store for information, then order online. Laws, which prohibited resale price maintenance (such as Fair Trade laws in the US), made it impossible for manufacturers to guarantee availability of high-service retailers. Optimal Investment in Acquiring Information Keep acquiring more information until the expected marginal benefit equals the marginal cost. Example 13.2. Example 13.2. Example 13.2. Suppose you have a good idea of the price distribution. Example 13.2. But additional search will be more attractive if you think $500 is near the high end of the distribution. Example 13.2. Based on your estimate of the distribution of available prices and the cost of search, you should choose an “acceptance price.” Then keep searching until you find a calculator priced at least as low as the “acceptance price.” Example 13.3. There is a spinning wheel numbered from 0 to 100. You have won the right to buy a new HP calculator for a price in dollars equal to 10 multiplied by the number you get on the spinning wheel when you spin the pointer. You spin and get 50, i.e., 500 dollars for the calculator Example 13.3. Now suppose someone offers you a chance to spin again for a fee of $100. If you end up with a higher number, you still pay only $500. But if you get a lower number, you pay the lower amount. Example 13.3. If you accept this offer, will you