In today's installment of our mental models catalog, we are going to discuss Veblen goods, which are a special type of item that would appear, at first glance, to violate the law of supply and demand relationships to prices. Veblen goods are a type of commodity, product or service for which demand increases the higher the price climbs because buying a Veblen good is seen as a status symbol, giving the purchaser social cachet. For example, a $10,000 Birkin bag from Hermès is attractive … [Read more...]
Mental Model: The Drunkard’s Search
March 20, 2010 By 2 Comments
The Drunkard's Search: The tendency for people to search in the easiest places, rather than the ones that are the most likely to yield results. The name comes from the idea of a drunkard seeking his car keys under a street lamp because the light is better instead of where he most likely lost them. The drunkard's search manifests itself constantly. I think there is an argument to be made that the drunkard's search concept can be expanded into behavioral economics. For example, with the … [Read more...]
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