It’s often the tendency of business to pretend that economics is true, even when it isn’t (paraphrased from Alchemy). London’s theatres often send out emails to people to encourage them to book tickets and it was my friend’s job to send these emails. Over time she learned something that defied conventional economic rules; if you sent out an email promoting a play that included an offer for reduced-price tickets, you sold fewer tickets. Conversely, offering tickets at the full price increased demand.
According to economic theory, this makes no sense, but in the real world it’s perfectly plausible. After all, any theatre selling tickets at a discount has plenty to spare, so it might be reasonable to assume that the show isn’t all that good. People are not being silly — they are showing a high degree of second order social intelligence.
My friend patiently explained to her colleagues that any discount would reduce the demand, so that they would end up selling fewer tickets at a lower price, but they insisted that she include a discount anyway. They persisted in acting this way because, even though it was empirically the wrong thing to do, in economic terms it sounded logical. [1]
Economic sense doesn’t always make logical sense.
Sometimes we just can’t help ourselves. We continue to act in the way we’ve always done things because it’s comfortable, it’s easy, and, on the surface, it seems to make sense. But change is constant. It comes at us relentlessly. What worked yesterday won’t work tomorrow. But here’s the thing. Unless we’re constantly evolving, improving, learning, experimenting, we won’t keep up. Worse, we won’t lead.
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[1] Sutherland, Rory. Alchemy. W H Allen, 2020.