Sam Peltzman on Regulation
Nov 13 2006Sam Peltzman of the University of Chicago talks about his views on safety, regulation, unintended consequences and the political economy of bad regulation. The focus is on his pioneering studies of automobile safety and FDA pharmaceutical regulation and the perverse incentives that even good intentions can produce.
This episode also includes a separate, bonus Mailbag Discussion beginning at time mark 47:56
- Russ discusses a listener's question about a previous podcast episode, Ticket Scalping and Opportunity Cost:
Josh Knox asks his friends a question posed by Mike Munger: Why am I reluctant to buy a ticket from a scalper for $1000, but likely to use one--rather than sell it for $1000--if I find it on the ground? Is that irrational? Maybe it's fear of fraud or the underground element in dealing with a scalper.
READER COMMENTS
chad
Nov 20 2006 at 2:41pm
I disagree with the ‘bad reputation’ idea. I think that it has more to do with anchoring and risk aversion. In other words, when I find the ticket I view it more as a ‘free ticket’ than as a ‘free thousand dollars’.
People also tend to be more risk averse than rational. So in the first case I can predict that after the concert I will be worse off than I was before the concert by $700 (assuming that I was willing to pay $300). But in the second case (finding and using the ticket) I am no worse off than before financially plus I have seen the concert.
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