Is ethical behavior an economic issue ? Do you really care ? What does caveat emptor mean to you?

Question

caveat emptor : The axiom or principle in commerce that the buyer alone is responsible for assessing the quality of a purchase before buying.

In your answer , Please Don't just repeat some variation of the above definition unless that is the only answer you can give.

This question will probably, but not necessarily, go into voting so creativity counts

It is very likely that there will be fewer than a couple of dozen ansers to this question. That is not really enough to form any reliable statistical information .So if you would please add what catagory you would place the question in. That would help so that I can reask the question in one of those catagories.

THINK !

Answer 1

Ethical behavior can certianly be considered an economic issue - consider crime, for example. There are definately certain aspects of rational and irrational behavior in committing crime. In a rational crime (let's assume property crimes are rational), the economic actor will weigh the cost benefits of committing the crime to maximize his utility (income).

As far as crime there is a definate aspect of ethics - as most people will agree that stealing from others is wrong and inethical. Urban economists study such things. One debate is the utility in criminalizing drugs.

As far as caveat emptor...it DOES exist today. There are certain consumer protections in place to prevent businesses from taking advantage of consumers, but that doesn't rule it out completely.

Consumers (must be an individual not a business) have the power of 93A - which allows them to seek remedies. This is a great part of the law b/c a consumers it helps prevent unscrupulous businesses from taking advantage of the average consumer.

Consumers can also sue for breach of warranty - implied warr. of merchantability/express/implied warr. for fitness. This prevents businesses from outright lying to a consumer. This is an ethical and just implementation of law b/c there is no way for a rational/reasonable consumer to know if a sales person is lying to them....about whether the used car he/she wants to purchase has been in a car accident.

The laws provides fair protections, but the best doesn't negate the need for personal responsibility . If a person is an idiot then that's his/her own problem - the law need not go so far as to protect people from themselves...

Answer 2

Once you get past the ethical issues associated with economics, ethical behavior is and is not an issue as far as theoretical economics is concerned but they can be an issue in real world applications.

First off, economics is pretty much restricted to be a social science due to ethical constraints. It's restricted to analyzing and finding links based off of real world data. A true experiment using people where you would make one group extremely poor and the other rich, or teaching one person math and another nothing wouldn't attract the best media attention. Even though this happens all over in the real world, a controlled experiment would be unethical.

Rationality in decision making for economics' purpose says that given the same set of circumstances and choices, an individual will always make the same decision. It is often confused with our ideal of what our own rational decision would be and our own "ethical" lines. If someone will always choose to rob a liquor store if there is a gun on the counter, an open cash drawer, and a lone employee, that person is rational according to the science. So is the person that always chooses not to. Someone that robs the store 1/4 times is not. Remember that this is theory based. If one time the cash drawer has $5000 in it and you rob it but the next it has $5 and you don't, you're still "rational". The circumstances changed and somewhere your mindset changed. Economics deals with trying to find that point. It's tough enough to do when dealing with all possible variables, hence the need for assumptions.

However, ethical behavior can become an issue, especially on the macro side. For one, a spinoff of the above example could be used to find how much money needs to be in the register to make someone cross that "ethical" line according to our laws. On the macro side, ethical behavior is taken into example often. Real estate and insurance price theory can be based from economics where the ethical behavior of people in an area can affect costs. As far as opportunity cost goes (first thing you learn in econ), the probable "ethical behavior" of the typical residents of an area can factor into your decision as to if the benefit of arriving to your destination quicker outweighs the risk involved in the route.

Sorry that it's long winded.... I'm cutting myself off and moving onto the last part.

Caveat emptor is another loaded definition. The easiest thing is to say that it occurs at all levels of the buying process. Just as I would research a new TV, the store I buy from researches the purchase of its TVs from manufacturers, the manufacturer (say sony) takes responsibility by purchasing good parts, the parts suppliers must purchase raw materials and so on. So the buyers are responsible but a layer of fallbacks is created. As consumers we're really hoping that along the way all of the buyers above us were also spot on in order to get the best quality product. Reputation is very important here as most sellers will take steps to ensure consumers come back and we benefit through warranties and return policies to erase the bad decision. There are issues (see the news on the couple that got pasta sauce instead of a camcorder recently) along the way where the chain breaks and reputations are tarnished (see how the manufacturer above cared about reputation and the retailer didn't) but the consumer still won in the end. So I guess as I ramble on that we are not necessarily responsible for our buying decisions as the desire for us to return and shop again by retailers will compensate for our occasional bad decision making. That is, unless, you go to a horrible store with no return or support.

Answer 3

Strictly speaking caveat emptor is no longer valid. The vendor is responsible for providing the good or service to the degree of expected quality and utility. Failing this constitutes a breach of contract. Consumer law protects people this way.

I don't care about caveat emptor because it is no longer an issue. If I don't like my haircut I refuse to pay until the job is done right. If my Nintendo breaks down in the warranty period I can get it replaced. Producers want repeat business, so they usually are happy to solve problems.

Answer 4

This is the best catagory for the question.

In todays market place it is not always possible for the consumer to make a purchase based on the quality of a product, prior to that purchase. More and more the packaging is so that it prohibits the customer from even coming in direct contact with the product. You are left to the discription on the carton or package.

I have yet to see any company put on their packaging, "Our product is inferior, it will break or stop working shortly after the 30 day warranty."

So this leaves the consumer at a great disadvantage.

:O)
Jerry

Answer 5

"let the buyer beware." This axiom is of little value today since buyer's never want to be responsible for their actions. Certainly, the ethics of the seller are a consideration. Therefore, one should not buy from someone you don't know or have been recommended to buy from. If this trend was followed, ethical behavior would be an economic issue because only ethical people would be successful at selling anything.

Answer 6

I do psychic readings. In the area in which I live, local government decided to license psychics, and give them back ground checks every year. They claimed that this would eliminate fraud and keep an eye on the psychics. After 4 years of this, they eliminated the license requirements because they saw that there was absolutely no problem with the Psychic community. Every profession has problems with individuals who attempt to use it for illegal gain.There is no reason to single out the Metaphysical community. Generally speaking, we have less problems than many other professions in that area. Take our major financial institutions for example and the underhanded practices that have come to light in the last couple of years. Greed and corruption are all around us. Also, being a psychic is part of a spiritual belief system and we still have religious freedom in the USA.