Are corporations rent-seekers in irrationality?

I've been reading Dan Ariely's Predictably Irrational, which says among other things that our preferences, spending habits, and performance on simple tasks are arbitrary and thus easily manipulated. For example, we prefer something when we're presented with a slightly inferior version of the same product, even if we wouldn't be interested in the product otherwise. Or, pricier medicine is more effective than cheap medicine. Corporations take advantage of our irrationality to sell us overpriced things, create demand where none existed and convince us we are having a good time. They are, in a sense, seeking rent and profiting from our irrationality. When humans lived in hunter-gatherer tribes, corporations didn't exist - we didn't have to deal with high-pressure sales pitches, budgets, or people we didn't know. Biologically, our brains aren't well prepared to deal with their tactics. So I don't doubt that companies peddle in our irrationality. That's not to say that corporations are evil; often times companies provide us with valuable time-saving services, or at the least convince us that we're having a good time, or value the product they pitch more than the money in our pocket. Has irrationality served us well? As we become more aware of our flaws, will we strive to be more rational? If we become more rational, corporations won't be as able to lure us in with a promise of free stuff, or brand loyalty, or price premiums. I think women will always be irrational; it's more important for them to consume conspicuously, live luxuriously, and show off when they can. As long as this is true, corporations will exist to define luxury, create demand for scarce, expensive products products (such as black pearls) and find ways for us to spend our money.

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One thought on “Are corporations rent-seekers in irrationality?

  1. Nicholas Tapia

    Implying that men are or will be rational?

    Define rationality. Are art, music, architecture, fashion, and design rational?

    Reply

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