An honorable member of the Coffee Shop Has Just Posted the Following:
The likelihood of a tourist returning to the same shop is low. Hence, the profit maximizing concept suggests that it is best to extract as much value as possible from a tourist, since it is likely to be the one and only transaction between the two parties. A business may try overcharging a tourist as long as it believes it can get away with it.
Therefore, it was not surprising that the two individuals highlighted in the scams above were foreign nationals, whom the shop staff at Sim Lim probably recognized as tourists.
Asymmetric Information
On the other hand, locals may easily be cheated as well due to asymmetric information. Asymmetric information refers to the situation where one party has more information about a product than the other, and hence is able to take advantage of this fact.
For products such Apple’s iPhone, most would already have known that Apple....
http://dollarsandsense.sg/the-econom...-simlim-scams/
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10-11-2014, 07:30 PM
The Economics Behind Sim Lim Scams
