The marginal cost of eating this bagel would be that I would have to run for about 30 minutes to burn it all off and have the possibility of not making my weight. On the other hand the marginal benefit from an everything bagel with sausage, egg, provolone cheese, and avocado, is very high with the joy that my taste buds would get from it.
The regret would come from not eating the bagel and still making weight, missing out on all of the joy that the bagel brings. However, the marginal cost of missing weight and my coach possibly killing me deters me from eating the bagel almost every time.
2 comments:
Jack, I really enjoyed reading your blog post on why you chose not to consume the bagel at Bodo’s. I think that you made a good point, in comparing both the regret you feel by not eating the bagel and the cost you would incur from eating it. Just like Prof. Coppock votes to avoid his mother’s grief, a large factor of your abstinence in consumption seems to come from the cost of grief that you would incur from your coach; hence, the MC(eating bagel)>E[MB(eating bagel)].
In your example, you don’t appear to be minimizing regret, as the minimax model suggests, because you say that the regret results from not eating the bagel, your final choice; I am sorry for the regret you will feel ;). I think, however, that you could flip your model around, and look at your decision through the minimax regret lense. The regret could result from choosing to eat the bagel and missing your weight. In order to minimize this regret, you would choose not to eat the bagel and thus make your weight, even if it means having to endure the appetizing and stomach rumbling smell (marginal cost) coming from Bodo’s.
While I was reading your post, another topic we discussed came to mind when you mentioned your rumbling stomach. For most people, I think that Bodo’s creates a positive production externality because many people enjoy the rich bagel aroma surrounding the store as they stroll past, without bearing any cost. For you, however, Bodo’s seems to create a negative production externality, because it rumbles your hungry stomach. Unfortunately, I do not see a viable Coasian solution to your problem because Bodo’s has property rights to produce, so you may have to find a detour so long as the opportunity cost of your detour/extra-time < the cost of your rumbling stomach.
Thanks Eddie. I agree I should switch around my model. I believe one solution would be to avoid Bodos and the Corner completely because they have property rights. This would eliminate the negative externality and in turn give me more benefits. Living on Wertland, I could run to grounds by way of JPA which is a longer route than the Corner causing me to lose a few extra calories along the way. So although this may seem like a cost, there are actually benefits to me running the longer route.
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