Wednesday, October 17, 2007

Products I've seen that don't exist Yesterday, I discovered the most bizarre security product I've ever come across. It can't exist. As a result of the usual lousy maintenance on my car, a loose battery connection caused me to lose power for one second. Result? My radio now is locked and unusable until I haul my lazy ass down to the dealership. The radio has a technology called "theftlock" in it. The owner of a car can put in a security code so that, if the radio is ever ripped out of the car (or, more benignly, if the radio is ever disconnected from the power source), it won't work until the code is re-entered. Problem comes of course when the owner forgets the code or when the bozo selling the car doesn't pass it on (yes I'm talking about you, John Hammond). The idea, I suppose, is like this. If enough people install a code, potential thieves know that a stolen radio will likely not work. As a result, he will move on to other things, like home burglaries (I've been burgled twice in the last year so, thieves please note, there's no frigging jewelry or small electronics left!). But to an economist, this makes no sense. If everyone else installs a code, then I am better off avoiding the inconvenience of doing so. The thief doesn't know that I haven't and will still move on. But everyone should think like this, so no one installs the code; the thief knows this and takes all the radios. If no one else installs a code, then there is no point me doing so either. Hence, the only equilibrium is with no one installing the code. Knowing this, the only equilibrium is for the manufacturer not to invent the product. Of course, everything would be different if there were some way for the owner to indicate that he (yes you, John Hammond) had set a code. Oh, so that what that flashing red light means! I've been wondering about that for years. Isn't it great how economics helps you understand things without ever reading the technical manual? 8:06:41 AM