Fair Is Fair: With Guests John Thorn & Richard Thaler

Choiceology with Katy Milkman

Charles Schwab

Investing, Social Sciences, Behavioral Economics, Science, Society & Culture, Decision Making, Charles Schwab, Dan Heath, Business, Katy Milkman

4.7 • 1.5K Ratings

🗓️ 31 August 2020

⏱️ 33 minutes

🔗️ Recording | iTunes | RSS

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Summary

“Mom! Janey got more ice cream than me! Not fair!” For kids—and many adults—the notion of what’s fair or not often involves comparing quantities of some valuable thing. But there’s another, more nuanced concept of fairness that crops up in certain types of negotiations. In this episode of Choiceology with Katy Milkman, we look at what people perceive as fair or not amid changing circumstances. At the turn of the 20th century, professional baseball had entered what came to be known as the dead-ball era. Pitchers had a distinct advantage over batters, resulting in low-scoring games and a substantial drop in attendance. Owners and league officials decided they needed to change some rules to entice fans back to their stadiums. One option on the table was to ban the spitball. John Thorn explains the history of the spitball and other doctored pitches and describes the state of baseball at the time. While empty bleachers were clearly bad for the bottom line, the owners also recognized the problem of implementing a rule change that would likely destroy some pitchers’ careers. You’ll hear about the clever solution that the league arrived at to ensure a more exciting game without alienating their players. Next, Richard Thaler joins Katy to explain his pioneering work with Daniel Kahneman and Jack Knetsch in describing the principle of dual entitlement. You’ll hear about several different scenarios where the phenomenon occurs and how it relates to status quo bias.

Transcript

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0:00.0	The 4th report, press 2, 4 sales, press 3, for account changes, press 4.
0:10.0	Operation Mobile, this is Cameron. How can I help you today?
0:14.0	Yeah, hi, 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.
0:23.6	Like I've had it for ages and the new plan, it's way more expensive but it's basically the same
0:28.6	service and I'm really not happy about this. I'm actually thinking about switching carriers.
0:34.4	Oh, I'm sort of here that.
0:36.4	Just let me have a look at your account here.
0:39.8	So I see you've been on the Freedom Unlimited Data Plan with long distance.
0:47.0	Yeah, the thing is we don't actually offer that plan anymore it's been discontinued I know I can
0:54.6	only stay on it if I stick with my old phone which is really on its last legs like
0:59.5	is there anything that you can do at all? Okay, well, I see you've been with us for over five years, that helps.
1:10.0	I'll tell you what, I think I can extend your current plan for two years and you can just
1:17.8	pay the difference on the cost of your new phone.
1:20.8	That could work.
1:21.8	Yeah and you know obviously next time you need a new phone you're going to have to move to the new plan, but I think this will work for you. So can I go ahead and extend your current plan?
1:30.5	Sure. Yeah, thanks for making that extension. That seems totally reasonable to me.
1:34.5	Excellent. All right. Let me just get your shipping details for the new phone.
1:38.8	So... Have you ever been in a situation like this?
1:42.8	The terms of a deal change in ways that don't seem fair.
1:46.8	Maybe the price goes way up on your cable bill, but the service stays the same.
1:51.4	Or you notice that the snow shovels are marked up at your local
1:54.2	hardware store the day after a blizzard. Or that rental car rates go up in August
	...

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