The Business of Love

Wednesday, October 19, 2005

Price as a Signal of Quality

Today in my marketing research class my professor made the comment, "In the absence of information, price is used as a measure of quality." He asked us if we would go to a doctor that charges $500 or a doctor that charges $25 if our insurance was paying the bill. Of course we all said that we would go to the doctor that charged more because we thought he was a better doctor. He gave other examples such as consultants or expert witnesses, but the idea was always the same.
Also of note is the idea that with price as a signal some products would actually have a higher demand if they had a higher price. This would be categorized as a Giffen good and they are theoretically impossible in economics. However, from the above cited examples, a strong case can be made that they do, in fact, exist in the real world. So how does this relate to relationships you may wonder?

Lack of Information

I think that I can speak for pretty much every man alive when I say that women are impossible to figure out. There isn't a better example of lack of information than women. Therefore, we have established that when a guy is looking for a special lady in his life, he has already met the first condition of lacking information.

"Price"

For our treatment of the topic, please do away with any monetary considerations similar to prostitution. The "price" attached to a woman is largely not monetary in nature. I identify three main "price tags" that constitute the bulk of a guys "cost".
1.)Time. This is the largest "cost" associated with the opposite sex.
2.)Money. Dating costs money, even to a cheapskate like me, just look at the price tags on engagement rings.
3.)Emotional Stress. You have to deal with the fact that all women think too much about things, and if you try to outsmart them, you're fooling yourself or going to go crazy.
Now, how do these prices signal quality? Let me give an example. You know a girl who is very popular with the guys. She is attractive, but not so much that so many guys would be interested. I know that I would want to take her out just to see what it was that every other guy found so attractive. Why? Because she has a higher price tag. With so many guys interested, it would require a Herculean effort to gain her attention and win her heart, yet many guys do just this. They see the high price and assume that there is something they don't know that adds to her quality. You want to find out the mysterious quality that makes her so attractive to other guys. The same could be said in this situation for emotional stress. How are you going to know if she acts any different towards you than she does towards other guys? Now all her signs have added meaning, yet they are also harder to decipher. Yet guys so often tackle these situations because they perceive a higher value because of the high cost. So what do you think? Let me know because I think every guy out there could use some help from experienced guys and the mysterious female.

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