Comments on: Economic Fallacies and Netflix

By: Matt Weiner

Matt Weiner — Mon, 26 Jul 2004 18:38:00 +0000

S Bethy—That’s true (though I don’t think anyone thinks that the .9 cent effect is morally wrong)—and note that this can’t be explained away by Daniel’s opening-the-till effect. OTOH, I think the Huston-Kamdar effect sounds better for gas prices since there is a much higher cost to reading to the end of the price when you’re whizzing down the road looking for a gas station than in an ordinary shopping situation. Of course now you get no extra information by reading to the end of the price, since the last digit is always 9.

By: Willy Sutton

Willy Sutton — Mon, 26 Jul 2004 16:47:11 +0000

When I buy a pot of milk, and then throw it away after few weeks, is that irrationality? We all make ‘mistakes’ in our consumtion, and we all modify our future consumtion based on our past experience. ‘Mistake’, is not the same thing as irrationality. It seems to me that it can take some time before someone decides that signing up for Netflix is a mistake, since the benefits could come in few months, for example when the annual ‘video season’ starts in December. Also, this Netflix-thin is a new thing for most people, and as such, the customer has no past experience that is quite the same (although many other experiences that he can draw on). Now I personally don´t buy milk at all, and Netflix is now a continent away.

By: Dan McEnroe

Dan McEnroe — Mon, 26 Jul 2004 16:32:16 +0000

My wife and I got caught up in what we called the “tyranny of Netflix.” We’d make our list, and then in the time it took for the movies come, we’d change our minds about what we wanted to see. So, the movies we got would sit there for about three weeks until we got in the mood to see them, at which point we were simply getting them “out of the way” in order to get to the stuff on the list we really wanted. Why didn’t we just send them right back, re-queue them, and get the movies we wanted? Good question. Never said we were sane.

By: Lindsay Beyerstein

Lindsay Beyerstein — Sun, 25 Jul 2004 18:13:33 +0000

I considered Netflicks money well spent even in months when I didn’t make my 4 DVD quota. 1) No late fees. 2) Much better selection than your average video store. 3) Convenient returns. You just drop the DVD in the mailbox instead of having to go all the way back to the video store.

By: david

david — Sun, 25 Jul 2004 16:44:25 +0000

OK don’t burn a copy. Copy it to HD and delete it after you watch it. I know its illegal. So this spliff I’m smoking.

By: nick

nick — Sun, 25 Jul 2004 07:45:41 +0000

Just an addendum to the .99 thing: I’ve noticed the tendency to read out big-ticket prices as single numbers (‘six-nine-nine-five’) or even in two-digit groups, as if they were small-ticket prices (‘sixtynine-ninetyfive’). Definitely designed to cushion the blow, since you don’t hear a ‘thousand’ or a ‘hundred’… But as John Quiggin notes, the small-ticket thing is rendered somewhat meaningless when sales tax is added on later and you instinctively add 10% on to the bill. Perhaps that’s also why Americans are so prone to tip, because all bills are designed to be supplemented? Oh, and Netflix? Especially good for watching box-sets of TV series. Order the lot, and there’s your flow. Why not burn a copy before sending them back? Because it’s illegal? And pragmatically, because we’re talking about a product that’s primarily consumed, rather than collected. You don’t really want a pile of DVDs to sort through. With the hassle and cost ($1/blank), it’s easier just to send the unwatched DVDs back and re-order. Does anyone use the on-demand services offered by cable companies? In theory, they should be the real replacement for the local video rental store (especially in combination with a TiVo or video recorder), but I’ve never found the on-demand stuff compelling…

By: harry

harry — Sun, 25 Jul 2004 01:33:29 +0000

We pay nothing for the videos/dvds we watch because we get them form the local public library. We keep them a week. We can queue for popular movies—and this is a problem for very high demand non-blockbuster type movies. Sometimes we have to wait 3 whole months!! Big deal. The selection is better than the local video store, though. You can check progress online. And NOBODY ELSE EVER RENTS H.R. PUFNSTUFF! So the kids are in clover.

By: david

david — Sat, 24 Jul 2004 22:55:17 +0000

Why not burn a copy before sending them back?

By: Chris

Chris — Sat, 24 Jul 2004 19:54:50 +0000

For the past several summers, we drop cable for 3 months (June, July, August) and then reup (for a $10 reconnect fee) when football season starts in September. This summer, we signed up with Netflix to replace the need to have something to watch when nothing else is going on. So, Cable costs $40 bucks a month, so by canceling it we come out $110 ahead (minus the $10 dollar reup fee in September). Netflix costs us $20 bucks a month for the 3 months we are keeping our membership, so we are still $50 bucks ahead. Even with netflix, the family budget is $50 richer for 3 months. Which may not sound like much, but does make a difference.

By: Shelly Rae Clift

Shelly Rae Clift — Sat, 24 Jul 2004 19:43:29 +0000

I love the way Netflix allows me to be slothful about returning a movie. If you’ve ever run up late fees at your video/dvd store then Netflix is definitely a bargain. Plus, I live in a small Pacific Northwest town where the best rental selection is at Safeway—not exactly a rich collection. Netflix has so many films to choose from that my queue is regularly maxed out at 500 movies. It may be years before I get to the movie currently at 500 (unless I change its place in the list) but at least I get to finally see those films that Safeway will never carry. Netflix is definitely a bargain for me. Anon.

By: Shelly Rae

Shelly Rae — Sat, 24 Jul 2004 19:40:33 +0000

By: Shelly Rae

Shelly Rae — Sat, 24 Jul 2004 19:38:33 +0000

By: h. e. baber

h. e. baber — Sat, 24 Jul 2004 18:23:06 +0000

I tried Netflix for a few months. I couldn’t ascertain my tastes by introspection. When I discovered that I didn’t want to watch enough movies to make it worthwhile I quit. If I’d decided to adopt a rule to return each movie within 2 weeks, whether I watched it or not, in order to make Netflix worthwhile—undertaking the self-discipline to carry it through, keeping track of how long the movies were out, etc. it wouldn’t have been worth my while even if I could lower the cost of the movies below Blockbuster prices because the costs of the hassle and self-discipline figure in. My ex-colleague, L., who was quite mad, rented from Blockbuster. When deadlines for returning movies pressed he would watch them fast forward to get them watched before returning them. One year he bought a Christmas tree after Christmas—he got a guy who was loading leftover trees onto a truck to sell him one for $5 and was pleased no end to have gotten a bargain.

By: Adam Kotsko

Adam Kotsko — Sat, 24 Jul 2004 18:14:20 +0000

What about local video stores who offer a Netflix-like scheme? That type of arrangement seems to exaggerate both the benefits and the drawbacks of Netflix. On the one hand, you still get the video-store experience, with the spontenaity that implies. On the other hand, I’d wager that you’re even more likely to hold onto movies too long, since you have to physically carry them back to the video store, keeping your failure to watch it in mind for much longer than if you had simply dropped it in the mailbox. Another thing to consider in cost-effectiveness is that if you’re going to have a long list of movies to watch, chances are most of them will no longer be new releases, so the individual rental will be cheap—and factor into that the fact that my local video store doesn’t make you pay off your late fees until it’s like $40.

By: Bernard Yomtov

Bernard Yomtov — Sat, 24 Jul 2004 17:57:13 +0000

The $9.99 effect works on me, much as I hate to admit to irrational economic behavior. When I pick up an item with a $10 price tag I find I am always pleasantly surprised to learn that it in fact costs $10, and not $10.99. This suggests to me that however the practice originated it is so common that we now instinctively take it into account when shopping. So for a merchant to stop it would be irrational.