Market capitalism assumes that all people are rational actors

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Re:First Sale My Ass (Score:5, Interesting)

by nahdude812 (88157) * on Thursday March 12, @04:43PM (#27172767)

I’d gladly pay retail price for my phone if it meant no contract. I’m highly allergic to service contracts in general, I will pay more up front to avoid them subsidizing me with tie-ins. When there’s a service contract, they have no motivation to provide good service past the contract signing.

Before I got an iPhone, I was on Verizon Wireless for quite a few years. Once my initial contract expired, I started getting frequent calls from VZW which went something like:

“The plan you’re on right now is no longer offered, but we can grandfather you in if you’ll agree to a renewed contract.”

“What happens if I don’t agree to the new contract?” said I.

“You’ll continue with the same features, at the same rate as you’re paying now, but it won’t be part of a plan,” was the response.

“What’s the advantage of being on a plan if I get the same features for the same price without being on a plan?” I countered.

“Without a plan, you… I’m not… well you would be planless! You would not be on a plan!”

“So what reason would I have to renew my contract, if I could avoid renewing my contract and get exactly the same thing?”

“I really suppose there’s no reason you would want to do that,” was the actual response one person gave me. I hope she didn’t get in trouble, but I sincerely appreciated her candor.

These calls happened weekly, and each time they got more aggressive. One person suggested that I would lose my service if I didn’t agree to a new contract. When I asked her in direct terms, “Is it true that if I do not re-up my contract, I will continue with the same features as I have now, at the same price, and that there is no reason to suspect this would change any time in the foreseeable future?” she responded, “No sir, your service will be cut off.” I said, “Then please disconnect my service as of tomorrow, I will go out this afternoon and find a new carrier.” It turns out this was a third party company who was only authorized to renew my contract, not cancel my service.

Previously when I had asked them to stop calling me about this, they had assured me they would.

After this most recent interaction where I was threatened with disconnection if I didn’t re-up, I called Verizon Wireless customer service directly. I asked to cancel my service, and I was transferred to the cancellation department. I told them that if I received even one more call about renewing my contract, I would cancel my service immediately. They said something about “30 business days to process that request,” (keep in mind, I had been getting the calls weekly). I repeated, “I don’t care how long you’re told to tell me that it takes to get me off that list, if I get such a call in even five minutes, I’m calling you back immediately to cancel. If you guys can get me off the list before the next time your contracted company gets to my number, then you will keep me as a customer; if you can’t, then you lose me.”

I never got another such call, and had service with them for probably three more years.

Now bear in mind whatever subsidization of initial costs they required had already been covered. I had made no indication that I wanted to stop my service with them, and fully expected to continue my service indefinitely, but here they were trying to pressure me into a commitment with absolutely no benefit to myself. If I had kept them happily for ten years, and they had called me again for this purpose after all that time, I would have fulfilled my promise and canceled my account immediately.

So, sorry for the long anecdote, but I’m one of those people who detests service contracts; I’ll definitely cover any subsidization costs myself in order to avoid them.

Re:First Sale My Ass (Score:4, Interesting)

by QuoteMstr (55051) <> on Thursday March 12, @05:07PM (#27173181)

Thanks for the anecdote. It illuminates why laissez-faire capitalism fails again and again: market capitalism works flawlessly in theory. This theory, however, rests on the assumption that all market participants are rational actors, and that these participants have access to all the information they need. This assumption does not hold in real life.

In real life, even relatively intelligent people only have 24 hours a day in which to make decisions, and nobody has the time to obtain all the information he needs to make rational decisions about everything. Most people will not have the skepticism or the presence of mind to question the service representative the way you did. Slick marketing exploits this weakness by pushing incorrect information that average people, pressed for time, will take as fact. Neither will most people use the courts to have contracts like this canceled, even if they become aware they were cheated: a lack of time again neuters the tools that capitalism in theory gives us to counter these abuses.

This is why we need explicit market regulation: to compensate for human inefficiency and weakness in the market. Cell phone contracts should be made illegal outright, the way they are in parts of Europe.

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