Mona Lisa has just started working for Tom and wants to leave early to go to a concert that she received tickets for. Based on her logic, if Tom were to say no then it would feel like he’s taking something away from her. Even though she didn’t purchase the item, the feelings of loss are often stronger than the amount of gains for an item.
See more: behavioral, endowment effect, framing, loss aversion
Tom isn’t happy with Mona-Lisa anymore, but he isn’t brave enough to break up with her. He decides to seek out help from his previous girlfriend, Ann, but it’s going to cost him. Ann initially refuses, but agrees once he offers her his chenille blanket that she likes.
See more: behavioral, break ups, exchange, gains from trade, prices, trade
Tom’s Bistro’s soft opening didn’t go well, so he thinks it’s time to quit. Even though Ron recommends sticking it out, Tom is phased by the sunk cost fallacy; he loves quitting! April comes to the rescue and convinces him to at least try a full opening.
See more: behavioral, costs, entrepreneurship, firm decisions, production, sunk costs, variable costs
Craig has to keep it together in the face of very strange requests during his interview to be the sommelier for Tom’s Bistro. While professional sommelier’s are known for being able to pair wines and meals, they must maintain their composure when customers ask for something different. While some may have odd preferences, its important to respect others’ utility functions.
See more: behavioral, preferences, subjective value, utility, utility maximization
Leslie meets with Kathryn Pinewood to discuss the sizes of sodas sold at the local restaurants. Leslie, as city council member, doesn’t believe that this move by local businesses is good for the health of her community. Local restaurants have gotten creative in marketing the larger sodas by offering price discounts when customers by large volumes. Despite framing the larger sizes with more normal names, Leslie is confused why people would keep purchasing that much soda.
See more: behavioral, choices, framing, health economics, negative externalities, preferences, price discrimination, second degree price discrimination, subjective value
Leslie wants to break up with Ben, but she needs to order a bottle of wine before she goes through with it. She let’s the waitress know that she wants wine, but isn’t coy about only selecting the cheapest one because she can’t tell the difference. There’s a long line of literature on the effects of quality and wine prices that shows even professionals can’t often tell the difference between brands.
See more: anchoring, behavioral, preferences, ranking, subjective value, utility maximization
Ben and Leslie are trying to outsmart the new Newport campaign manager, but they aren’t sure if she’s giving them good advice or purposely bad advice. Having complete information means that everyone knows that everyone knows, but Ben and Leslie are feeling a bit lost.
See more: behavioral, full information, game theory, optimal behavior, second mover advantage
While on suspension, Leslie buys her officemates Christmas gifts based on their personalities. Ron mentions how he only gives people $20, but realizes how great Leslie’s gifts are and how the office needs to remedy the gift giving imbalance. While Ron takes the most efficient outcome for gift giving, he’s realizing that there may need to be a bit more thought put into the process.
See more: behavioral, equity, gift giving, preferences, utility
Ann runs into Donna at a single’s event but is quickly sent away because she represents competition in “the jungle.” Dating markets work best whenever they are “thick,” but if there aren’t many available mates then it can be hard to match up.
See more: behavioral, common resources, competition, coordiantion problem, dating markets, game theory, zero-sum game
Tom needs to move, but doesn’t have a truck. He enlists the help of Mark because he has a pickup truck and Andy/April because he needs labor. All agree to help even though Tom offers no compensation. Social norms often mean that friends help each other despite not being compensated.
See more: behavioral, fairness, gains from trade, irrationality, opportunity costs, social norms