Recently, a bank was trying to decide what fee to charge for\" expedited payment
ID: 1230394 • Letter: R
Question
Recently, a bank was trying to decide what fee to charge for" expedited payments" - payments that the bank would transmit extra speedily to enable customers to avoid late fees on cable TV bills, electric bills, and the like. To try to determine what fee customers were willing to pay for expedited payments, the bank conducted a survey. It was able to determine that many of the people surveyed already paid fees for expedited payment services that exceeded the maximum fees that they said they were willing to pay. How does the bank's findiing relate to economists traditional focus on what people d, rather than what they say they will do?Explanation / Answer
In this case, we can tell the banks find the levels of customer satisfaction to be different. People say they will do one thing, in this case and really do what they say. This implies, people our financially savvy and understand that late fees are much higher than expedited fees to pay in advance. From this, banks can also tell customers, are forgetful and need reminders. It is important to know this so the banks can be sure to send more than one email reminding their customers of payments needed. Normally, economist know what people say and do our not usually the same. The rational person, normally says they know something is importanat such as investing in their childrens future through early savings but there is a disconnect with them actually doing so.
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