Tuesday, June 08, 2004

[Economics] NYT Magazine has an interesting piece about selling bagels on the honor system (via Brad DeLong):

"He had also -- quite without meaning to -- designed a beautiful economic experiment. By measuring the money collected against the bagels taken, he could tell, down to the penny, just how honest his customers were. Did they steal from him? If so, what were the characteristics of a company that stole versus a company that did not? Under what circumstances did people tend to steal more, or less? ... He has identified two great overriding predictors of a company's honesty: morale and size. Paul F. has noted a strong correlation between high payment rates and an office where people seem to like their boss and their work ... He also gleans a higher payment rate from smaller offices ... If the payment tendencies that Paul F. has noted so far might be called macro trends, it is the micro trends -- those reflecting personal mood -- that are perhaps most compelling. Weather, for instance, has a major effect on the payment rate. Unseasonably pleasant weather inspires people to pay a significantly higher rate. Unseasonably cold weather, meanwhile, makes people cheat prolifically; so does heavy rain and wind. But worst are the holidays ... As considerable as these oscillations may be, the fact is that a poorly paying office rarely turns into a well-paying office, or vice versa. This has led Paul F. to believe in a sobering sort of equilibrium: honest people are honest, and cheaters will cheat regardless of the circumstance."