Human Nature

Tyler Cowen's post on the economics of snowstorm shopping  and the comments to it make for very interesting reading. All commentors do not agree with Cowen's reasoning of why Eggo waffles would fly off the shelves, much faster than less known brands in the event of a snowstorm. One argument is the vendors stock the stores independently and it may just be a logistics issue that prevents them from replenishing supplies in a severe weather situation. Another one is that people stuck indoors might be missing on eating out and to compensate may spend on higher end groceries than they might otherwise have. 

The same outcome but so many different hypothesis and each is a good, reasonable one. Such are the challenges of trying to fathom human nature and use such understanding to turn in a profit.  That might explain why Macy's continues to send me brochures, discount cards and such when in fact I shop no more than a couple of times in year (if at all) at that store. By some analyst's estimation I must fit the profile of the kind of shopper they seek. They could not be further off the mark. Each time, I see something from Macy's in my mailbox I wonder why they continue to waste their time and resources on one such as myself.

Likewise if Eggos were to try and glean insights into customer behavior - year round and seasonally (as in a snowstorm), they may end up trying to push their waffles to those who like them least.

Negative Price

Home buying is no walk in the park even in the best of times and these days the process seems to be fraught with even more unknowns and variables. When you read that at some point, a prospective buyer of a condo could actually get paid by the seller so the property is off their books, you have to wonder what else is left to see.

If is makes sense for the seller to pay someone to take ownership of their property, logically,it must not be a good deal for the buyer even at a negative price. Do they then wait a little longer to see if better inducements to come along - maybe someone will throw in a late model car in as well so they can get rid of the condo.This Bankrate article has a succinct analogy for negative equity which makes it easy to appreciate how hurtful it can be :

Having negative equity is like walking on a treadmill with an injured knee. You don't get anywhere, and it's painful. If you're lucky enough to be financially solvent, that puts you in the enviable position of being able to make the house payments, even though it feels like you're throwing hard-earned money into an abyss.