When it’s worth driving across town for a deal

Tom Vanderbilt of How We Drive picks up on a Thaler classic from mental accounting. People irrationally say they will drive across town to save $5 on a lousy $10 calculator, but won’t do the same for $5 off a nice $125 jacket. Vanderbilt says his car’s navigation system shows him real time prices at nearby gas stations, allowing him to rationally calculate when it’s worth driving across town or even down the street for a better deal.

Interestingly, there was a 36 cents a gallon difference between the closest station and one an additional .3 miles away. So, on a 11 gallon fill-up, i could save nearly $4, with a minimal amount of driving. Doesn’t seem so irrational…But the next three stations, all located near each other, were charging the same price. I’ve actually used that more expensive station before, for the odd reason that there’s hardly ever a line (perhaps precisely because it’s more expensive). But I’ll be curious to see what long-term effects will be on gas-station pricing transparency as more drivers have these devices; will prices flatten out, or will there be more volatility as individual stations advertise particular deals, luring drivers who wouldn’t have considered those stations before?

About these ads

Tags:

One Response to “When it’s worth driving across town for a deal”

  1. Josh Maxwell Says:

    Hi there,

    I looked over your blog and it looks really good. Do you ever do link exchanges on your blog roll? If you do, I’d like to exchange links with you.

    Let me know if you’re interested.

    Thanks..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Follow

Get every new post delivered to your Inbox.

Join 63 other followers

%d bloggers like this: