Wednesday, September 22, 2010

Relationship Advice in Economics Form

This week, Jeff Ely wrote a wonderful post on how men and women view relationships differently. Here is an excerpt:
For her, relationships are all about adverse selection. It’s not his actions per se, it’s what they reveal about his type. She’s perfectly willing to forgive his missteps, she believes him that he’s trying hard and that he didn’t know he was being a louse, but that’s precisely the problem. If he weren’t such a lemon he would know the right way to say things, she’d always be in his thoughts, and she’d always be his highest priority.
Click through to see how men are different.

I like the post because it puts into simple terms the distinction between moral hazard and adverse selection, which is usually explained in the context of insurance and car markets.

1 comment:

  1. I like that too. Being an economics major, I also like more down-to-earth ways of explaining more complex ideas to my friends.

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