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Academic
: ConglomerateAre Consumers Irrational About Gas Prices?
By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring
With gas prices hovering around $4 most places, gas users seem to be doing some silly things to save on gas. No one enjoys paying more for gas, and unfortunately, most of us depend on a certain amount of gas each week to get to work, school, etc., regardless of our income. But the marginal increase in gas prices seems to be disporportionate to the efforts of drivers to buy cheaper gas. A few weeks ago in Champaign, a gas station sold gas at 20 cents cheaper for a certain amount of time. Some cars waited in line for 30 minutes, idling in the summer heat, to buy ten gallons of cheaper gas. And of course we know those who drive farther to get gas that is cheaper by a few cents. The more expensive grocery store in town here has been giving fuel discounts at its branded pumps for each $50 spent there. I have to admit, I was snookered until I realized I was paying much more for groceries to get a smaller fuel discount.
The NYT recently had an article about owners of luxury cars who are starting to by the cheaper grade of gas even though their owner manuals recommend the highest grade of gas. I was hoping the article would say that this was OK (my owner manual tells me to buy the highest grade, and I'd like to switch, too), but the article quoted a driver of an Acura saying the savings (twenty cents a gallon) was worth the pinging in his engine. That just doesn't seem like a good trade-off. Doesn't the pinging mean something bad is happening? I don't know how many gallons of gas the average driver uses a week, but is the $2-4 dollar savings worth jeopardizing a very expensive car? And don't you picture the driver then going through the Starbucks drive-thru in his pinging car? Surely luxury vehicle drivers can shave off $3 in expenses per week somewhere else.
Around the same time, the NYT also reported that roadside assistance crews were seeing their workload double or even triple as drivers drive too far on low tanks to avoid refueling and then run out of gas. (I hear my Dad from 1985 telling me "It costs the same to keep it full as to keep it empty.") Most interesting was the suspicion of some assistance organizations that some drivers were calling them just to get the free gallon of gas. People are really thinking that calling roadside assistance, waiting on them, and perpetuating a fraud is worth $4? (And it wasn't at $3?) Apparently one cagey driver in Dallas called the courtesy van three times in one day!
Full post as published by Conglomerate on June 19, 2008 (boomark / email).
Pulte Homes Faces Class Action over Home Prices
Pulte Homes Faces Class Action over Home Prices
DirecTV
alleging a cancellation fee that is improperly or insufficiently disclosed to consumers.
Antitrust
Price Fixing Could Cost Consumers up to $300 Billion Annually
Manasek Auto Parts
allegedly conspiring to fix prices for replacement oil, air, fuel and transmission filters.
KB Home and Countrywide Financial Corp.
allegedly conspired with appraisers to boost housing prices as the market crashed.
Airborne Settlement
Company agrees to pay consumers $23.3 million class action settlement for false advertising.

A Teachable Moment: Avoiding the Irresistible Pull of Irrational Behavior in Legal Research
Sway: The Irresistible Pull of Irrational Behavior
Responsibility for the Big Squeeze: Employers, Consumers, Citizens
Leonard on "The Interpreter" (and irrational behavior)
Check it out - Predictably Irrational









