Funny Bargains By Bryan Caplan

The worker-employer bargain has many funny features. Scott Alexander points out a few:

1. Employers sometimes yell at workers for small mistakes; workers aren’t supposed to yell at employers no matter how big the employers’ mistakes.

2. Employers sometimes demand job applicants’ bodily fluids; applicants fear to ask prospective employers for a cup of coffee.

3. Employers sometimes demand that workers stay late; workers rarely demand to leave early.

Scott takes these as strong symptoms that the supply-and-demand model of labor markets is deeply wrong. The asymmetries exist because each worker needs his employer a lot more than his employer needs him.

Now let’s consider two other bargains with similarly funny features. First, the patron-waiter relationship.

1. Patrons sometimes yell at waiters for small mistakes; waiters aren’t supposed to yell at customers no matter what.

2. Patrons sometimes ask waiters for elaborate special treatment (e.g. no nuts, extra nuts, sauce on the side, gluten-free sauce…); waiters aren’t supposed to ask patrons for the smallest favor (e.g. a tiny bite of their dessert, or “Kindly eat over your plate”).

3. No matter how diligent waiters are, customers are still allowed to tip them zero.

Second, consider the customer-Big Box Store relationship.

1. Customers can buy an item, try it, decide they don’t like it, then get a full refund.

2. Customers can ask store employees to help them find a product, but store employees would never ask customers to help them stock the shelves – even for a minute.

3. Customers can be rude to the store manager, but the store manager still has to be polite to customers.

In all three cases, of course, economists have a standard mantra: it’s all reflected in the price. If being an employer is pleasant and being a worker is unpleasant, labor demand goes up, labor supply goes down, and the wage goes up. If being a patron is pleasant and being a waiter is unpleasant, demand goes up, supply goes down, and the price of restaurant meals goes up. If store customers and stores know they can return anything they don’t like, demand goes up, supply goes down, and the price of store products goes up. Why exactly is it so important to restaurant patrons that waiters never ask them for a bite of their dessert? Norms, psychology, and status all play a role. But as long as asymmetric conditions are reflected in the price, who cares about their source?