lunes, 25 de marzo de 2013

WhatsApp and Rational Thinking

WhatsApprecently announced they were going to charge (some of) their users0,99$ for their services. The users' reactions were really harsh: many of them immediatley started looking for alternative mobile phone messengers like LINE or KakaoTalk, critized WhatsApp on Facebook and felt “screwed” by the company (I'm not kidding; one of my contacts said that on Facebook).

Eventually it's not really clear what WhatsApp is going to do. It seems that that some users won't have to pay, others already had to pay and some just stopped using WhatsApp. But why would somebody consider 1$ to be a disproportionate fee for a service that you can use everyday (24/7) and that is really usueful? I can think of two contradictory explanations (maybe you can think of more):

First reason: People try to maximize their utility
If you study basic Microeconomicsyou'll learn that people always try to maximize their utility and that they're completely rational – we're all “homines economici”. Well, in this case users can save 0,99$ a year by switching to any other messenger. The users' utility would increase by 0,99$... but there's always a “but”... They also have to tell their friends that they stopped using WhatsApp. They could inform them by publishing a post on Facebook or by sending an e-mail, which can be time-consuming. Furthermore, it's probable that some of their friends won't see nor read these messages. So they'll have to call them and tell them that they started using a new messenger, which costs money. In the end these people might save a couple of cents by switching to Line or KakaoTalk. Do you really think those guys are completely rational? Well, they're as rational as those people who pay 500$ for a handbag which was made in China and cost 15$... which leads me to the second possible argument...


Second reason: There is no “homo economicus”
People are not rational. Actually the intelligence quotient of 50% of the global population is below average (if you assume that intelligence is normally distributed) – maybe “irrational” is not the most appropiate word to describe them...

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