Sunday, 13 April 2014

Fun Applications of Purposeful Behaviour

Having gained some momentum yesterday with my Alchian tribute and applications of the Alchian-Allen Theorem, here are some common phenomena which all find a neat explanation in what rational-choice theorists like to call purposeful behaviour:

1. Soldiers marching in lines - Explained by the fact that, if soldiers are ordered to march in straight formations, defection is more easily detected. Defection is individually rational for each soldier, but not rational for the army that wants battle. I am not sure, but I think I may have originally read this (a long, long time ago) in a book by David Friedman, probably his Price Theory (or its popularized version Law's Order).

2. 42nd Street in New York City - I am a keen fan of the Big Apple, but really this applies to big cities everywhere; homosexuals, being a fairly small minority, have a hard time finding a partner among small populations. In expectation, there are many more potential partners in larger populations, causing homosexuals to abandon low-density sticks. Richard Posner's Sex and Reason contains this very fabulous mechanism.

3. When the standard pie size in America for pies bought in shops was twelve inches in diameter, apple pie was the most frequently bought kind, but when the seven-inch pie was introduced, apple pies plummetted in popularity - Explained (by the late giant in price theory Walter Oi) by people's unwillingness to eat twelve-inch pies by themselves and the consequent necessity to find common ground on flavour. Such beautiful simplicity.
4. Women are less prone to violence than are men - Men, except for Arnold Schwartzenegger, cannot get pregnant and therefore do not put their ability to procreate at risk by engaging in physical fighting, say with a rival for a mate. There is some risk, of course, but nowhere near as great as the risk for women, who can lose their baby by getting into a rumble. Professor Ed Laumann at the University of Chicago was the first person to bring this nice titbit to my attention, although I don't think the reasoning is original with him. He said women "fight" their rivals with words instead of punches (e.g. "look at those shoes she can't even walk in those things").

5. Vagrants and proselytizers in towns and cities are stationary; in more rural areas and in residential suburbs they tend to walk around from door to door - this one I have not seen anywhere else, nor have I investigated the accuracy of the claim, but it seems to fit people's experiences. Also, it stands to reason that more people will be on the move at any given time in a city or town than in basically any other area. Since vagrants and proselytizers benefit from contacts with others, this behaviour is to be expected.

6. Bathrooms are located along vertical lines in multi-storey buildings - Coming full circle in this list of examples of purposeful behaviour, this one is again due to David Friedman, and is known as his law of finding bathrooms (or something like that). The reason it works is that it enables the plumbing to be more or less vertical, thereby reducing the costs of labour and material for pipes.
These applications are all reasons economics might work. They are fun because they concern everyday topics which are explained in a very simple way. I believe without the idea of purposeful behaviour, the phenomena I have just listed would be much harder to explain. Truly, Economics is everywhere.

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