Bottled Water, Bargaining and Working till you drop

Bottled water is more expensive than filling a bottle at home. Yet people do buy bottled water when they’re out of their homes. Are such people rational? Why can’t they just carry water bottles from home and save on expenses on water. Well, they are rational people after all. Instead of saying they aren’t, let us see why they maybe rational.

What is the probability that you will feel chronically dehydrated one hour after leaving home? Choose a random number (this isn’t really a mathematics blog). Whatever you choose it’s probably much less than one. So carrying your water bottle from home is a toss-up decision, just like deciding where to go this evening. So people who carry water bottles are risk-averse, but rational people. Those who decide against carrying water bottles are risk loving but equally rational. If the person who takes a bottle doesn’t get dehydrated, nobody would call him a fool, just like you don’t call insured homeowners fools for insuring their homes. On the contrary, if a person doesn’t take a bottle with him, he risks dehydration and would be willing to pay a reasonably high price for a bottle of water outside. Given the choice between collapsing out of dehydration and the dollar-cost of buying a bottle, buying a bottle seems the better pick. Such a person is completely rational, only that he would have probably been better off carrying water bottles. Then again an argument can be made that this person simply preferred the cost of buying a water bottle on such occasion to the invisible “physically tiring” cost of carrying bottles from home. A rational person would see whether it is likely or not that he will end up dehydrated and how painful carrying water bottles is in choosing whether or not carry water bottles. But in either case, he/she is perfectly rational.

It may also appear as if a person who bargains for everything is a “smarter” customer than one who doesn’t.  This couldn’t be further from the truth. Choosing between bargaining and paying up a higher price is a choice similar to choosing between bottled water and carrying water bottles from home. In both cases, people are perfectly rational. I don’t liking bargaining with sellers, for I hate wasting my energy on it. I’m not good at it and it’s not very likely that I have the skills to convince the seller to give me his good(s) for less. So I choose not to bargain. Am I rational? Absolutely. Probably I’d be better off financially if had honed my bargaining skills, but like not studying in advance (read my previous post if you haven’t done it yet), it’s my choice. I could have earned something if I had worked instead of writing this blog, but I like doing this and I hate working. I’m just being rational. Next up, why you shouldn't go to college just to get a job!