Girardian sentences to ponder

We also find that stronger peer effects are exerted by more price-sensitive individuals. This positive correlation suggests that the elasticity of aggregate demand is substantially larger than the elasticity of individual demand. Through this channel, peer effects reduce firms’ markups and, in many models, contribute to higher consumer surplus and more efficient resource allocation.

That is from a new NBER working paper by Michael Bailey, Drew M. Johnston, Theresa Kuchler, Johannes Stroebel, and Arlene Wong.

Comments

A friend buys a cheap android, a month later I do the same. Are we rivals now? Smartphones are everything but scarce =)

Girard is so overplayed these days by internet intellectuals looking for contrarian hipsterism to signal their social worth. I blame Silicon Valley and Thiel in particular for bringing this weak meme to our attention. I bought a few large pizzas today and shared it with a few friends and families at the park. There was no mimetic battle to the death over it. Not on this beautiful memorial day weekend.

I keep a copy of Girard next to my Sarte, Foucault, and Lacan. It makes me feel so worldly.

"aggregate demand is substantially larger than the elasticity of individual demand"

2 + 2 = 7

macroeconomic conjuring is so amusingly creative....

I am a micro micro guy.

Often times I had to critically review (because the income/cash flows were "unexpectedly" depressed) estimates of fair market value for hard-to-value asset portfolios, over-aggregation masked very low values of portions thereof.

Generally, when an asset class wasn't "cash flowing," the collateral values were not available sources of recovery of principal and interest.

Yes. Here a mass market means the supply chain can plan longer production cycles, yielding longer value added chain, more specialization and more efficiency. The measurable cash flow derives from the measurable mass market.Becoming more measurable means adding another 'bit' to the market machine, when viewed as an imprecise N bit allocation computer.

"I am a micro micro guy."

You can say that again, hun! This is why I prefer the colored fellow down the street.

+1. Good troll. He really set himself up for that one.

If anything, peer effects in the cellphone market increase markups. For example, iPhone owners don’t like seeing green-colored text messages. Green indicates that the recipient has a plebeian non-iPhone and will not always properly view your text messages due to incompatibilities with the iMessage platform. The “pleb” is thereby more incentivized to buy an iPhone. Instead of lowering prices or innovating to attract plebs to its product, Apple can increase the penalty of not having an iPhone so that plebs buy it at a higher price. So you have a situation where people aren’t just buying an iPhone because it’s the best phone for the price, but rather out of pain avoidance and a need for peer approval.

Apple can easily merge iMessage with a universal rich text messaging standard. For obvious reasons, they won’t. If that contrived rent-seeking didn’t exist, then I think it would be safer to generalize from the above study. In reality, there are counteracting forces on the elasticity of aggregate demand.

Of course an intelligent comment is ignored.

How do the peers of the price-sensitive individual learn the latter's acceptable price point? Maybe it's the firm that is responding to the price-sensitive customer not her peers. Anyway, the divergence of micro and macro is interesting.

Okay, here's my shout-out to Mr. Girard, certainly (one of) the most influential philosophers of our age.

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