Dina is walking around the store with Bo, sharing some of the resources Cloud 9 has invested in to deter crime. Only half of he cameras are actually function, and the security guard isn’t holding an actual weapon, but potential criminals don’t know that. The goal is to give the illusion that a criminal would be caught.
Tag: asymmetric information
There’s a sale on non-toxic, organic pillows and Garret adds that customers should be weary of what that means the other pillows contain. By providing such labels on certain products, it means customers are likely to assume the alternative products contain harmful ingredients. This asymmetric information, where the store knows more about the products than the customers do, can lead to inefficiencies in the market.
Employee Health Fund
Mateo has an ear infection and can’t afford to see a doctor because of their high deductible health plan. Since this is common in the store, Amy sets up a fake charity to help raise funds for Mateo to pay for a doctor’s visit. Jonah thinks this is preposterous and tries to setup a savings club that employees can use when they need it. After realizing how many pre-existing conditions his coworkers have, they realize that the $20 membership fee isn’t enough to cover all of their issues. These scenes serve as a good example of adverse selection since the sickest employees are more likely to sign up for the program since their healthcare costs outweigh the membership fee.
Making Some Quick Cash
Bo is interviewing for a part-time position at the store, but he doesn’t really have any retail experience. Cheyenne tries to relate Bo’s experience as a dad to how he can use those skills in the store since she believes he is good with people. Bo let’s Glenn know that he’s only interested in earning some quick income and then plans to leave. Once he realizes Glenn is in charge of hiring, he takes back his statement.
Jonah and Amy discuss whether or not it’s a good idea for Jonah to date one of his boss’s foster children. Amy tells him it is not a good idea to date the boss’s daughter, but Jonah feels that he and Glenn’s daughter have a connection. Because Jonah just met her, he’s not really sure if they would be a good match and his hope is that Amy can provide more information to help him make a better informed decision.
Store brand beef products are being marked down 80% and Garret suggests that customers should consider why a store would do something like that. He’s suggesting something may be wrong with the product, and perhaps the store knows more about the quality of the meat than the customers do.
Interviewing Management Candidates
While interviewing candidates for the assistant manager position, Amy and Glenn try to learn more about the potential candidates’ ability to move into this new role. They are surprised by the applicants, namely that the pharmacist is interested in switching roles or by Marcus’s accidental admission of stolen property. The interviewing process can be costly because it takes time and effort to find a good “match” for the company. Interviewing candidates from the pool of current employees helps reduce the cost of finding a worker, but it still requires Glenn and Amy to take time away from the floor to interview people.
Jonah bought a sex doll that he believed looked like Amy. He planned to dress the doll up and tease Amy throughout the day, but he realized that it got out of hand. He approaches Amy in the parking lot to apologize and show her a receipt as proof that he returned the doll. He ended up paying a very large restocking fee, more than the doll was worth, because there isn’t much of a market for used sex dolls.
Jonah actually summarizes a bit of Akerlof’s Market for Lemons paper in that he knows more about the quality of the doll (that it hasn’t been used at all) than the person who may purchase it. The collapse of the used market exists here because Jonah ends up paying money to not have the doll anymore.
Is Insurance a Pyramid Scheme?
Mateo comes down with an ear infection and Jonah comes up with an idea to create a store insurance policy. Originally, the store raised money for medical bills by putting a donation jar out for customers to donate spare change. When Jonah realizes that takes a lot of work, he proposes creating a pool of funds from the employees and have them contribute monthly to cover someone’s bills. Unfortunately, he’s created a semi-pyramid scheme that requires individuals to donate money to help one individual.
The Life of an Insurance Fund
When Mateo gets sick, Jonah comes up with an insurance fund to help cover employee medical bills because the store does not offer health insurance. The team members join the plan because it only costs $20 each month, but Jonah has promised to pay previous medical bills. Jonah and Amy quickly find out each team member, especially Sandra, has a lot of pre-existing conditions and they realize that they can’t cover everyone’s costs at one time. The two try to break the two groups apart, but the members in the pre-existing condition group will have to pay significantly more to cover all their costs.