People endogenously allocate more attention to thinking about prices in high inflation environments; which they hate doing because they don’t like complexity. A plausible reason people hate inflation so much Sort of remarkable how far “thinking is costly” can take you - ThreadSky

arpitrage.bsky.social • 111 days ago

People endogenously allocate more attention to thinking about prices in high inflation environments; which they hate doing because they don’t like complexity.

A plausible reason people hate inflation so much

Sort of remarkable how far “thinking is costly” can take you

Comments

wsandholtz.bsky.social•110 days ago

📌

gumbotron.bsky.social•108 days ago

I wonder how far complexity in general goes towards explaining certain types of nostalgia. The world in general is becoming more complex, and there are far more hoops to jump through for those living a fully modern life. This itself can be a serious source of aggravation for some.

benlockwood.com•111 days ago

This seems plausible, but it’s interesting that in some settings people seem to like the way price fluctuations give them a chance to find a good deal.

arpitrage.bsky.social•111 days ago

It could be people are a bit asymmetric about it (ie hate complexity around higher prices; but willing to search to get a better deal)

benlockwood.com•111 days ago

Could be, but my understanding of the JC Penney experience was that Johnson replaced time-varying prices and coupons with stable prices, and they lost market share overall. If people hate complexity, that might predict market share would have increased?

arpitrage.bsky.social•111 days ago

It could be occasional sales and discounts are associated with urgency and thrill which consumers liked. Or that consumers anchored on initial price and really think they are getting a discount. Finally the discount actually simplifies things a bit: just wait until sale; and buy then

wescontreras.com•110 days ago

Lots of urgency and thrill, and the discount is usually not on the whole product line, but rather just enough to get you into the store to spend. Also, in retail fashion specifically, it's an expected part of the game, so stable prices violate customer expectations.

benlockwood.com•111 days ago

I like the urgency and thrill story. Not sure I believe discounts are simpler than stable prices. I can also believe this is highly heterogeneous—Johnson’s strategy came from his success at Apple retail, which has stable prices, but it fared terribly at JCP.

arpitrage.bsky.social•111 days ago

I think the “complexity” argument is also, really, but the computational challenges around calculating valuation, expected value, or how to readjust budget given price rises. Ie essentially some set of arithmetic operations. Not as hard as looking at a good on sale where lower price is displayed

p-hunermund.com•111 days ago

What about good ol' loss aversion?

arpitrage.bsky.social•111 days ago

Note this too

https://bsky.app/profile/sweiwang.bsky.social/post/3lbxma6mwwc2x

p-hunermund.com•111 days ago

Interesting. Seems pretty hard to find a rational agent in a U.S. sample these days.

arpitrage.bsky.social•111 days ago

I am right here though

maranzazuru.bsky.social•111 days ago

📌

appreciatorsteve.bsky.social•111 days ago

Using my attention as I wish and not as I must: it’s good!

filipecampante.bsky.social•110 days ago

Having grown up in Latin America, that resonates…

www.lianeon.org•111 days ago

Arpit, I also imagine that negativity bias comes into play. They only "see" the price increases but not when they come down.

richardnerland.bsky.social•110 days ago

I'd like to integrate @ivanwerning.bsky.social and stating that inflation is conflict.

Conflict is complex and requires a lot of work to try to win! Maybe you keep up with inflation but at that cost of conflict.

https://x.com/IvanWerning/status/1644315822477721601?t=x1doLGcNNcxx-osPklFyEQ&s=19

trevondlogan.bsky.social•110 days ago

Gas prices give a great example of this phenomenon. https://www.jstor.org/stable/41289462

rob-mcclelland.bsky.social•111 days ago

With inflation, one can't just optimize once, one needs to frequently reoptimize as relative prices change.

lucastosborne.bsky.social•110 days ago

📌

lucastosborne.bsky.social•110 days ago

📌

waningibbous.bsky.social•111 days ago

"Some people like thinking / complexity more than others" might also help explain the nature of post-Covid political cleavages.

arpitrage.bsky.social•111 days ago

Yeah, it’s interesting to connect this with educational polarization

uaeeconomist.bsky.social•111 days ago

If only we scrap our local currency for the US dollar. https://youtu.be/yl8mDCeKu_k?si=uNbgk7yZgm9xOnXW #EconSky

patrick1.bsky.social•110 days ago

The United States has become a nation where complexity is depreciated and simplicity is all most people can handle. That’s why Trump lying in such simple and direct ways works so well.

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