Monday, February 16, 2015
Gracia Gilreath, Chapter 2, Question 2
Within the chapter, Wheelan states that we as consumers should look to hire someone who has similar incentives, but not identical incentives because in the long-run it can be more beneficial for both rather than just one or the other. For example, when buying and selling a house, a real estate agent wants to do his job quickly no matter if it is more beneficial to you as a seller. By getting his job done quicker, he is able to make a decent profit, while not having to do much work and can therefore move on to another customer where he can perform the same process. In a year, he sells more houses and makes more money by setting the price lower and selling more quickly, than setting the price higher and spending more time selling the house. The house does get sold, but the sellers do not make as much profit as they could have because their real estate agent has their own best interest in mind.
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