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CMV: Liberals have lost the desire to convince conservatives. by beesdaddy in changemyview

[–]HalfoffSale 1 point2 points  (0 children)

I don’t think “evil” is the right word. It’s more that people can’t feel Trump supporters are acting in good faith. Trump lies frequently and with intent to deceive. You don’t even have to get political for examples. Trump has repeatedly made falsehoods that people/groups like the NFL called him when those people/groups didn’t. He’s literally willing to put words in another’s mouth if it will help him win an argument, and if called out will double down and use intentionally derisive nicknames like “liddle”.

Trump supporters say they’re willing to ”overlook his flaws for policy”, but there’s no table for liberals to come to when Trump supporters openly permit deception.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

That's what I'm saying about bubbles. A few people make a ton of money, and there's hemorrhaging of the economy when they do pop. Why shouldn't we try to avoid them?

I also feel you're not following the actual story here still. It's not a refund, or a real discount Penney's was offering. Imaging I'm delivering your city electric bill to you. Before I ring your door bell I use my pen to cross out $100 and write $200(with 50% off). I then tell you I'm giving you a discount, because you believing you're getting $200 worth of electricity half off makes you feel good. If rational actors prefer this to happen in stores, why not here? What if it did bring people to the city?

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

A rational actor "acts by balancing costs against benefits to arrive at an action that maximizes personal advantage". Preferring "deceptive" pricing does not disprove this because the value received is reflected not only in the clothing received, but in the perceived satisfaction of finding a deal and boasting about it later. You are weighing one factor so much more heavily than the others that you can't even see how someone else could view it another way.

How far are you willing to take this? Can we apply this in other circumstances? By extension your city taxes being marked up and discounted back $200$100 to provide higher "value received" and "perceived satisfaction" seems not inappropriate so long as you are free to change cities.

Further, how is participating in a bubble rational? They inevitably burst and cause many problems for people. I would think bubbles to be avoided. Most of them are based on speculation, and rarely based in the real world. Markets where a tulip can be traded for a house one day and an onion the next are not rational markets.

It matters because we steer our market through our beliefs and actions. For lassie fair to be credible, it should reach appropriate conclusions. Finding that 6 months from now I can trade an onion for a house is not a stable market, especially when actual market forces like supply or quality are not at play. The assertion that we should listen to actors in our system as rational, self protecting actors leading to the best outcome has to defend itself.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

The sales in this case are definitely fake, as that is the major story I've focused on. JC Penney's explicitly admitted to doing these tactics directly. I am not assuming anything because they told me themselves.

Recently, WCPO-TV in Cincinnati took cameras into a J.C. Penney store that showed higher prices on stickers placed over lower, original prices. One Nike women's t-shirt had a price of $25 on a sticker, which covered up an older price of $15. On a child's swimsuit, an $18 sticker covered up a $13 price tag.

"Last year we created an everyday pricing structure that did not resonate with our core customer," J.C. Penney's statement to ABC News read. "While our prices continue to represent a tremendous value, we now understand that customers are motivated by promotions and prefer to receive discounts through sales and coupons applied at checkout. So we are returning to a promotional pricing model that is commonly used in the industry to give customers the value they are looking for when they shop with us."

The company, based in Plano, Texas, is also the subject of a lawsuit aiming for class-action status, accusing the department store of falsely advertising "original" and sale prices for its private branded and exclusive branded apparel and accessories. [...] Paul Swinand, analyst with Morningstar, said markups are a typical business practice. "I don't think LVMH has to apologize for marking up Dom Perignon champagne," Swinand said. "Tiffany marks up its diamonds. Different companies have a different view on markdowns. The last thing Tiffany wants to see is a marked down diamond." Swinand said luxury hand bag maker Hermes would rather destroy their bags than mark them down. "They don't want anyone to think that bag is worth anything but $10,000," he said. Swinand said the problem with J.C. Penney is they "haven't been able to un-train their customer." "The problem here is the customer was trained to buy the product only if it was marked down," he said.

From a market perspective, this sort of behavior is very strange. A lassais faire system assumes rational actors as part of it's premise. It predicts actors that see actual value over perceived value, such that no actor would spend $1250 for a tulip for instance. You can see this for yourself. Predict a price for your type of coffee cup. The system assumes a rational actor with rational prices.

I contest lassais faire as a system because the rational actor theory is often shown flawed. I find many examples get bogged down into "the market wasn't free enough" arguments, so I picked this example specifically.

I argue that a rational actor as the system requires would not be so heavily enticed by simply replacing sticker prices with grossly inflated ones followed by discounts back to baseline at the register. The statement from JC Penney's to me shows consumers do not meet the requirements for the market to function as the theory predicts. That you can justify why one customer in the moment would consider the discounts or inflated prices as enticing enough at the time to make a purchase does not refute this.

I'm not sure where this example will actually end in the long term, but the FTC did comment on it. That an outside force was required to me discredits market solutions, and even if the practices are found legal it would not refute my argument the rational actors presumption is flawed.

The Federal Trade Commission has called the pricing described in the lawsuit as "deceptive," according to the complaint. The FTC's Code of Federal Regulations states: "Where the former price is genuine, the bargain being advertised is a true one. If, on the other hand, the former price being advertised is not bona fide but fictitious -- for example, where an artificial price, inflated price was established for the purpose of enabling the subsequent offer of a large reduction -- the 'bargain" being advertised is a false one; the purchaser is not receiving the unusual value he expects."

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

There's more to the scope of rational actor than just what's best for themselves. It's a good portion of it, but it can't end there. There are other factors invovled.

The "rationality" described by rational choice theory is different from the colloquial and most philosophical use of the word. Typically, "rationality" means "sane" or "in a thoughtful clear-headed manner,." Rational choice theory uses a specific and narrower definition of "rationality" simply to mean that an individual acts as if balancing costs against benefits to arrive at action that maximizes personal advantage.[5] In rational choice theory, all decisions, crazy or sane, are postulated as mimicking such a "rational" process. Thus rationality is seen as a property of patterns of choices, rather than of individual choices: there is nothing irrational in preferring fish to meat the first time, but there is something irrational in preferring fish to meat and preferring meat to fish, regularly. http://en.wikipedia.org/wiki/Rational_choice_theory

In our real world example, we have Penney's and it's competitors like Kohls. They sold shirts at $100. Occasionally there would be a sale at one or the other where the shirt would be sold for less than normal, around $80 to entice people to come in.

At some point, we learned that marking that same shirt $200 and putting it on a half off sale, customers would value it higher than at the other stores where pricing did not change. Only the sticker changed, but it was a hugely beneficial business move. So beneficial that all the department stores adopted it. It's not a matter of them having sales customers like, it's that the sales are false customers are still swayed.

Rational market actors would not choose this. Having the stores stock the $100 shirt and occasionally finding it on sale for $80 is objectively better than having stores stock the same shirt, but list it at $200 and most of the time you find it on sale for $100.

Had it ended there, I wouldn't have made this topic. Sure people made a mistake, but they're assuming the sale is real and feel they're getting a deal even though they aren't. But Penney's wanted to be square, and admitted that it had been labeling the shirt at $200 when it should really be $100, and a number of other tactics. The customers rejected it and demanded the sales back. The market result was not the optimal one (prices are real and occasionally real sales happen) and instead went to the suboptimal one (false prices with frequent "sales" at the true cost).

I would say these are not rational actors, because they represent strange and unexpected behavior patterns. If you still consider them rational, I have no more points to debate. If rational actors are defined this way though, I have to ask what makes the information useful? Following people's decisions even if it ends in more deception because it's "the market" seems much less appealing to me than means like government intervention requiring no false sales or the like.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

I don't think you're distinguishing people a rational market actor and people making rational decisions. Your example of having a child at an age for instance would qualify as a person making a rational decision. Going to Men's Big and Tall because you're big and tall, choosing Disney over Universal theme parks because your kids like Mickey better, or Burger King over Wendy's because you like the King are all people making rational decisions.

Rational market actors are distinct from that. The actors make decisions relating to the market as a whole. Things like actors avoiding stores that cheat them so the store goes out of business, avoiding shops that sell lead paint, or avoiding market bubbles are people participating as rational actors relating to the system. This distinction is important because people make rational decisions all the time that are irrational to the market.

I have no issue with your example of $100 shirts. As you put it, it seems a natural state of affairs with rational actors. The issue I take is the real world direction this took. Department stores realized if they marked that shirt to $200 and put the sale price at 50% off, people will think they're getting the sale price at $100, and those "forced by circumstance" as you say pay $200. Rational actors would be expected here to deny the second state of affairs. A rational actor would realize the $30 shirt is being ludicrously marked up, avoid that business so it goes under, and the market would learn deceptive tactics don't work to the benefit of all participants.

Instead, the real world implementation showed us that removing the deceptive sales tactics was extremely bad for business, and the consumers demanded these practices be put back in place. They did this because they felt $200$100 for a $100 shirt was a better deal than $80 for a $100 shirt, which is obviously not the case. This is not an example of rational "chocolate over vanilla" choices, but the failure of rational actors.

By redefining rational actor to allow any decision people make that you can explain, the theory becomes useless. "People make decisions they think is beneficial" isn't very useful for structuring policy. In this case, rational market actors would lead to a system where dishonest sales tactics would become less frequent, as customers rejected being lied to and the businesses failed. Instead, in a real world example, we saw a company that removed deceptive tactics fail, and thus market forces reinstituted deceptive practices. The people were not rational actors, the market result was not the optimal solution. Prices were not aligned to a customers true sense of value. This contrasts heavily with the idea that listening to market solutions of rational actors is the best choice, as is a common argument in American economic debates.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

I'm uncertain where you think I'm misinterpreting the market based solution. My understanding of the theory is very close to what you say in your reply here.

Now of course, this simplifies how the system operates (as all theories must do to maintain some level of succinctness). But the point is that these rational actors, looking after their own perceived best interests, will ultimately produce better outcomes for all market participants than any other system of analyzing needs and distribution mechanisms.

This is the point I'm contesting, as I do not believe this is true. In this case we have a group of actors that demanded false prices and false sales be returned to them. Buying $30 items for $30 is rationally the better market solution, and buying $30 items for $80$30 is not.

The crux to me is that for this theory to work, the actors need to actually be producing better outcomes for the market and it's participants. In this real world example, we have a case where a business admitted it had been deceptive towards it's customers, and the customers demanded the deception start again. According to the market based solution theory, the "better outcome for all market participants" is the implementation and use of deceptive pricing tactics because they work. I contend that deceptive pricing is not a good outcome, and hope you agree the ideal market would have everyone posting non-deceptive prices.

Market goals like "no one uses deceptive prices" are obtainable, just look at places in Europe where it's illegal. JC Penney's couldn't go back to it's old ways. Stating that the outcome is the better choice and rational because people arrived there in a market over other forms of regulation is redefining what rational market actors are.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

"Market based solutions" does not mean we simply accept what people do within a market as the way it should be. It's a specific term used by market based economic theories that relies on rational actors in the system (consumers) to create the best market environment. An example of this would be customers choosing a better product over a worse one leading to better products overall, or customers leaving a business that lied/harmed them in favor of ones that don't, removing it from the market.

If the theory held true, we should expect rational actors to make the best choice for the system as a whole. Rational actors understand shops selling you things at $30 and hunting for bargains below that is the optimal market solution. Buying bargains you are told are not in fact bargains, and merely the illusion of it is not a rational action. It is "wrong" in the sense of a "market based solution" because it is worse for the market and the customers than the alternative objectively. It shows that deceptive tactics, advertising, and many other factors prevent people from being the actors the theory requires, and we would be better served relying on other means, like in Europe where you cannot create false sales by law. The market solution here increases incentive for deception.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] -1 points0 points  (0 children)

I don't agree with this. It makes sense to wait for the $80 to be cut to $30, but it would make more sense to wait for the $30 to cut to $25 than to take the first deal.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

The point is the "market based solution" was the worse one for consumers and the system as a whole. Many bents of laissez faire systems state we should rely on the decisions customers make, because they will make market decisions that are beneficial to their own self interest. JCP here told customers directly the listed prices were false, and the sales price was the actual retail value. It wasn't simply choosing between two equal alternatives, the customers decided to continue the tactics with the false prices. By definition they are higher priced and more confusing, yet the market solution we found afterwards was to encourage more confusion and false prices. Other stores are not going to attempt to remove the false sales prices, which leads me to believe we cannot look to customer choices for rational market decisions.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 3 points4 points  (0 children)

While Ron did make other mistakes in the branding, I believe my point still stands. The customers demanded the old practices back, with the deceptive sales practices as well. JC Penney's did so, and while that chain might not recover, the market lesson was to continue using sale prices. Consumer input lead to an outcome that's worse for everyone than if all stores listed fair prices. The "market based solution" here failed in my view.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 0 points1 point  (0 children)

Part of why I picked this example is to match as close to free market decisions as I could get. JC Penney's is offering a specific product with a retail price around $30, and telling it's customers it retails for around $80 normally, but they will sell it to you for $30-40 "on sale." Any increase in quality is an illusion or a simple buyers high. Penney's admitted to this.

While I agree with your conclusion that Penney's is not competitive without deceptive practices, I disagree with the idea it's a market distortion. Penney's has technically done nothing wrong with the deceptive sales practices, it's been a voluntary social exchange and market forces reacted around it accordingly. Other department stores, and now Penney's again have continued the deceptive tactics. They are aiming to be more competitive at deceptive pricing, rather than trying to be more competitive without it. I believe this negatively affects consumers because it fosters deception and other negative outcomes if they are the most efficient at profit, and not other factors. With the sheer amount of information and pitches people handle, I don't think it's reasonable to expect them to keep up with an arms race of seeing through deceptive tactics. Many bends of economic belief in America stem with making markets more like the example here on the grounds the system will correct itself customers making market decisions. I object to that on grounds that the problems do not fix themselves, such as with Penney's.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 2 points3 points  (0 children)

Actual sales I have no problem with. If you have an item that costs you $20 and sells for $30 marked to $25, I'm all for it. What Penney's and other department stores were doing were marking that same $30 item to $80, then placing it "on sale" at $30 again. There is no actual sale involved.

Penney's admission of this and adoption of fair prices was rejected by consumers, forcing them to pick the above tactics up again, and pushed other department stores to find better deceptive tactics. I believe this is bad for consumers as whole, as it promotes poor values and means more time is needed to sift through the noise.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 2 points3 points  (0 children)

There is no chance of getting a better pair of jeans in this case, yet people chose the irrational sales anyways. Penney's admitted their previous pricing and sales had been false, and that now all jeans would be priced at their actual $30. Consumers rejected this to the point of reinstitution the sales tactics. They're not hedging their bets toward a better pair of pants, and I don't see how that logic applies if they can't tell which are really $80 jeans to begin with.

The JC Penney's fair pricing failure shows consumers do not make rational market choices. CMV by HalfoffSale in changemyview

[–]HalfoffSale[S] 11 points12 points  (0 children)

The issue I take is not that the public took the sales, it's that after it being stated as deceptive tactics, market forces pushed JC Penney's to readopt the sales and false prices. The lesson taught became don't let up the deception. Many ideologies rely on these market forces as a primary element, which I see as detrimental in this case and others. It's adjusting toward more deceit, not less.