Business Daily from THE HINDU group of publications Sunday, Aug 26, 2007 ePaper |
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Investment World
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Economics Columns - Simple Economics Power of context
Collective bargaining power.
B. Venkatesh If you like behavioral science, observe the auto drivers, especially the ones in Chennai. Ask a driver at any auto stand to take you to your destination and he will quote almost twice the “normal rate”. The exorbitant price that he asks will bear no relation to the honest face that he wears. Ask an auto driver who is not part of the stand but just passing by and you will get a better price. Why? The answer lies in the power of context. What is it? Reacting to circumstances
It means that the way you react depends on the circumstances and the time and place in which they occur. Suppose you are at the stadium to buy a ticket to watch your favourite football team play. The counter clerk tells you that the match is sold-out. Disappointed, you drag yourself towards the parking area. As if God-sent, you see a person step out his car, take his wallet to pay the parking attendant and in the process drop his ticket. What will you do? If you are honest, you will give the ticket back to its owner. But what if circumstance takes over your emotional behaviour? You badly want to watch the match. So, you pick the ticket and head towards the stadium. You may rationalise that God wanted you to watch the match, and, therefore, made the other person drop his ticket! You may be an honest person but the circumstance forces you to be dishonest. That is the power of context. Now, apply this effect to the drivers at the auto-stand. Auto drivers like to earn more. Their collective power at the stand prompts them to quote more than the “normal rate”. The one or two honest drivers may be forced to quote the “stand rate” because of the power of context. A driver passing-by is not affected by this behaviour. He may, hence, be willing to transport you at a “normal rate”. There are, indeed, so many emotions involved in your travelling decision.
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