Fair Is Fair: With Guests John Thorn & Richard Thaler

TL;DR

The principle of dual entitlement explains how people feel entitled to their reference points or the status quo in transactions, leading to perceptions of fairness or unfairness.

Transcript

support press two for sales press three for account changes press four Ovation mobile this is Cameron uh how can I help you today yeah hi um I'd like to upgrade my phone but the last agent that I spoke to told me that I'd have to give up my current data plan and I really don't want to do that like like I've had it for ages and the new plan it's way... Read More

Key Insights

• 😥 Dual entitlement is the belief that individuals are entitled to their reference points or the status quo in transactions.
• 😥 People resist changes that result in a loss relative to their reference point.
• 👻 Legacy solutions, such as granting special status to certain individuals or allowing them to keep existing deals, can be used to address the principle of dual entitlement.
• ❓ The principle of dual entitlement can impact customer loyalty, employee satisfaction, and perceptions of fairness in various interactions.
• ✋ Price increases during high demand may be viewed as unfair due to the perception of a loss compared to the previous price.
• 🆘 Understanding the principle of dual entitlement can help individuals make better decisions and find compromises in various situations.
• ⚾ Balance between offense and defense in sports, such as baseball, often requires rule changes to maintain fairness and excitement.

Questions & Answers

Q: How did the concept of dual entitlement come about?

The concept of dual entitlement arose from a research project focused on understanding people's perceptions of fairness. Through surveys and experiments, it was observed that people feel entitled to what they have and are resistant to giving it up.

Q: How did Major League Baseball handle the banning of spitballs?

Recognizing that veteran spitball pitchers would lose their livelihood if the ban were implemented abruptly, Major League Baseball granted legacy status to 17 pitchers who were allowed to continue using the pitch until they retired.

Q: Why do economists often view price increases during high demand as fair?

Traditional economic theory suggests that price increases during high demand are fair because they allocate goods to those who are willing to pay more. However, this perspective ignores distributional considerations and people's perception of fairness.

Q: How does the principle of dual entitlement relate to default settings?

The principle of dual entitlement explains why people often accept default settings. People feel entitled to the status quo and are resistant to changing it. Default settings become the reference point, and any change is seen as a loss.

Summary & Key Takeaways

• In a phone call, a customer is unhappy about being forced to give up their current data plan when upgrading their phone. The customer considers switching carriers.

• The customer service representative offers a compromise by extending the current data plan for 2 years, allowing the customer to keep their old phone for now.

• The concept of fairness in transactions is explored through the example of a rule change in Major League Baseball that banned the use of spitballs. However, legacy status was granted to 17 pitchers who were allowed to continue using spitballs until they retired.