A dueling charity outside the store has led Amy to offer a $5 gift card when people donate a toy to the toy drive inside the store. The two charities are substitutes for one another and offer similar goals. Some people donate to charity to feel good about their actions, but others are willing to donate if they are incentivized to do so. The Samaritan decides to buy a jar of army men to get a gift card for each one.
Jerusha and Glenn are over for a party that Amy is hosting and Jerusha takes the time to console Amy on her recent divorce. Jerusha actually points out the sunk cost fallacy and praises Amy for her divorce since it’s better than staying in a marriage that doesn’t make you happy. A classic sunk cost fallacy example is often relationships where one party is unwilling to break up the relationship because of the amount of time they have spent together.
Worrying Too Much
In the previous season, a massive tornado destroyed Cloud 9. Earlier in the episode, the employees held a memorial for a coworker (Brett) who they believed passed away during the tornado. Dina, normally the most confident worker, is a bit freaked out by a rainstorm outside and suggests that they head to the storm shelter. Her risk tolerance seems to have shifted to becoming rather risk averse following the tornado strike. Preferences for risk can change and be context dependent. In this case, a traumatic event a few months earlier has made a large impact on Dina’s tolerance for risk.
Giving Cheap Gifts
Cheyenne gives Dina a gift to thank her for being a bridesmaid, but Dina thinks it’s just cheap jewelry that one of her birds might eat. She asks Cheyenne to return the gift and to just give her cash instead. The inefficiency of gift giving occurs when purchases of gifts spend more money on an item for someone than that person would be willing to spend if they had purchased the item themselves.
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.
Dina is Bad at Gifts
Dina tries to impress her coworkers by giving them gifts, but she breaks into their lockers to give them their gifts. Some of the gifts are mildly offensive, but she thinks they are appropriate. The deadweight loss typically associated with gift giving is that people who give the gifts spend more money on the items than the recipient is likely to spend for the same item.
A customer is having trouble identifying a new toothbrush to help with his tartar problem. With all the options available, some companies advertise as being good at fighting plaque while others focus on tartar prevention. When consumers have a lot of options, it’s sometimes hard to fully consider the tradeoffs. This paradox of choice can explain why some people don’t behave rationally when presented with a seemingly overwhelming number of options.
As Dina and Amy go searching for Bo, Amy notices that Dina doesn’t have a radio in her truck. It turns out that Dina special-ordered her truck without a radio (even though it costs more) because she believes it would make her truck less appealing to potential thieves. If criminals behave rationally (which Gary Becker argued that most do), a truck without a radio wouldn’t be worth the potential cost associated with car theft. Dina has removed the incentive to steal her truck.
When it comes to selecting numbers for a lottery, people tend to irrationally believe certain numbers are more important than others. Each number is just as likely to be selected as the other numbers, so placing a higher probability on one number being selected isn’t rational. Garret isn’t fooled, but he also isn’t fond of wasting his time watching others behave so irrationally.
Glenn wanted to see Saw because he thought it was about carpentry, but he quickly realized it was a horror movie. He wasn’t having a good time and even threw up in his lap, but his wife didn’t want to leave because they paid for the ticket and it was date night. Glenn and his wife should have left if they weren’t enjoying their movie since the tickets were non-refundable, but like many people, Glenn and his wife fell for the sunk cost fallacy.