Fast food and health standards
As I was waiting in line to grab some McDonalds before going to see the latest Harry Potter movie I got to thinking about why the line was so long. In fact, I got to thinking about why, when there are other perfectly good foods around the food court, was half the place lining up to grab some greasy McDonalds.
I realized the best way to analyze this is to think about my own behaviour. Now I virtually never go to the McDonalds in the food court (that day I just had a hankering for a Boss burger), I usually go to the Chinese place. However, when I’m in some foreign land (such as Hamilton), I always go for McDonalds or Subway.
When I go to buy food in a foodcourt in Wellington, I know I will be going back there again soon, so their is an incentive for me to experiment, find out what I like and then stick to that. Simply put, its a repeated game. When I arrive at a foodcourt in Hamilton, this is a one-off experience, I have no intention to come back to the city of the future. So this is a one shot game.
Now, franchises like McDonalds offer a standardized product, I know what I will get. The rest of the shops could sell anything. As a result, McDonalds is the less risky option, there is less variance in the quality of McDonalds meals. So even if the average food court meal is better, as long as i’m risk averse there is scope for me to grab MiccyD’s. If it is a repeated game, then experimenting gives me information for future periods, as I know that some of the food is better than McD’s food, I’ll try things until I hit something (or a bundle of foods) I like, then I will repeatedly consume it (or repeatedly consume some time varying combination of fast foods based which is dependent on previous consumption).
By virtue of this blog I have to bring this rant back to government. I think I can do that with health standards. By setting and enforcing health standards the government cuts out the worst foodcourt places, and as a result lifts the average standard and reduces the variance/risk of eating at other stores. Now even if McD’s was within the health standards before these regulations, they will be forced to up the quality of their product, or risk losing their one off customers.
So govt. health standards lift the standard of franchises, and reduce the risk of getting killed when you go for a meal. That sounds like positive government intervention to me.
I dunno about the repeated game theory: this sounds more like an optimal search problem than a game to me. The optimal search strategy will dictate that you continue to try new places if both the probability that the new place is really good is high enough, and your satisfaction with your current eatery is low enough. I think this is more a case of you having different beliefs about the chances that the local vendors are high quality depending upon the town you’re in. Wellington’s foodcourt sellers are likely higher quality, on average, than Hamilton’s so the payoff from trying new ones is lower in Hamilton. I think that’s plausible even if it doesn’t say much about your faith in Hamilton’s dining establishments.
I think that’s kinda what Matt’s saying…
The payoff of searching will be higher if it’s a repeated game, because the information you acquire will can be used repeatedly in the future. Thus the net benefit of searching is something like: [probability of finding a better fast food establishment] X [premium of quality over McDonalds] X [1 + number of future purchases] – [cost of searching].
In Hamilton the number of future purchases = 0, because lets be honest, you never want to go to the Tron more than once. So the net benefit of searching is smaller.
I think it is a mix of both. I didn’t want to put Hamilton down by saying it had lower food quality though 😉
However, now I’m hungry, gotta eat something
I don’t think we’re disagreeing, Steve. I agree that you can use optimal search theory to analyse this problem, as you suggest. I just don’t think that game theory is useful here. I don’t think that the food court acts strategically with respect to the consumer: they are more like an oligopolist.
I agree that the using the word game was inappropriate, as their is only one player. I didn’t really mean it in a strict sense, I just wanted people to get the feeling it was something you do over and over, and in the 5 mins I had to write it, repeated game was the only way I could think of saying it. It is just a search problem that stems from that market imperfection of imperfect information.