Tag Archives: free market

The Adam Sandler effect

sandlerI was thinking a little more about the different rules we apply when we make our customer choices, and how these nuances may be lost if we ask research questions in the wrong way.

A really simple example, and one I’ve mentioned before illustrates what I call the Adam Sandler effect.

What happens is this: Five of you decide to go to the movies this Saturday. So far so good.

But which movie? You and your group love movies, and surely you have a collective favourite to see. So you start discussing what’s on and four of you agree the new Clooney film is the one you want.

“Ah… but I’ve already seen that film,” says the fifth member of your clique.

The veto rule.

Okay what’s our next best choice? And so it goes. Whatever you choose, somebody has either already seen it, or has read a tepid review.

What you have here is a collision between two competing sets of rules. You set out to see your favourite film, and instead you and your group end up seeing the “least objectionable” film that, actually, nobody has wanted to see. This is where Adam Sandler, I swear, has earned his place as one of Hollywood’s three top grossing actors of the past 10 years.

Apart from The Wedding Singer which was a great little film, the rest have been an appalling bunch of half witted comedies. Little Nicky anyone?

It doesn’t matter. Every weekend at the movies there is a blockbuster or three –  and then there is Adam Sandler, lurking there: his movies ready to pick up the fallout from your friends well-meaning decision process.

Now for researchers this has serious implications. If we only ask about what things people want, then we may end up with a theoretical ideal – but our research will never pick up the kind of goofy, half-assed, slacker productions that actually gross the big dollars. In our questionnaires we need to think about how we might pick up the Adam Sandler effect. Good luck to the guy. He has the knack of reading the Saturday night crowd much more accurately than most of our surveys could ever hope to achieve. We should learn from that.

  • Choices depend on positives as well as vetoes
  • When two or more people make a decision, the outcome depends more strongly on vetoes than on positives
  • There is always a market for things that are least objectionable.

Free markets versus slightly controlled markets. Pt 1 of a 3 part Blog.

Free Market Capitalism

In the mid 1980s the Chicago school of economics prevailed, with the rise of Milton Friedman’s school of free market thinking we moved from an era of controlled markets of the type which enabled US Governments to break apart giant corporates like the Bell Telephone Company to become a less monopolistic group of companies: the “baby Bells.”

Somewhere in that decade, 30 years ago, there became an acceptance that we should stop having complex moral debates about money (Greed is Good! said the Gekko characterter, in a satire of this thinking) and simply let the market decide.

There’s a lot going for this idea. For one thing, it is a lot simpler. I remember years ago being an a political meeting – a meet the candidates evening – when somebody in the audience asked a candidate: “where do you stand regarding abortion?” The audience erupted into booing – not because we thought the issue didn’t matter, but because we knew that no meeting was going to resolve this issue. We’d break into two predictable camps, there’s be rancorous arguments and none of us would move a step forward. Who needs it?

So too, it would seem, when it comes to debates about greed, or about fairness. In the 1980s our societies bought into the idea that money is amoral, and the the free market is a fair, democratic arbiter in the marketplace of ideas.

So the political arena became less a debating chamber in which issues of conscience were discussed as a board of directors in which the costs and budgets were evaluated. Where once the death penalty was discussed in moral terms, soon it became debated in terms of the relative cost of lifetime incarceration.

At the same time, the intellectual landscape of ideas became increasingly monetised. It was only in the 1980s that the valuation of companies incorporated an estimate of a brand’s value. So today we get extreme valuations on companies that may perform quite dismally in terms of pure turnover or productivity. Remember how the merger of Warner and AOL resulted in a hyper-valuation – and the value of the company rose on the hot air of the marketing deciding…to beat the true gravity of the merged company’s actual performance.

Examples such as this, or need we remind ourselves, the balloon of the 2008 sharemarket, show that the marketplace is NOT actually a robust arbiter of what’s good or bad, even in business terms.  And, for that matter, I could go into the well tested new business models that suggest that much business success is due to luck rather than collective wisdom or inherent hard work or talent. (See the experimental work of Duncan Watts.)

The lack of perfection of the free market – due to hysterias, clumsy mechanisms, misinformation (even in an age of instant media) and poor management (all those banks that made risky, sub-prime lending so fashionable) – gives us plenty of reason to allow that sometimes, sometimes, the public needs to step in and – for the greater good – override the free market.

Free marketers, by and large, were welcoming of bail-out money from Washington, and were quick to call on regulatory authorities to do their work. (Bring in the Government!)

So if we need some intervention, and some slight control of the market, we are accepting that sometimes the public good still trumps the absolute free market.

By how much? Where does one draw the line?  That’s going to be a theme of my next few blogs.