Knowledge And Decisions

Informal relationships permit decisions to be individualized in another sense as well. Each decision can be considered in relative isolation rather than as part of a take-it-or-leave-it “package deal.” A series of love affairs can be varied as to personality types, duration, intimacy, or intensity, but at the other end of this spectrum — marriage in a no-divorce system with powerful sanctions against extra marital affairs — it is a “package deal” with respect to time and with respect to the whole set of personal characteristics of the partner. If one has had enough — temporarily or permanently — of the sensitive introspective type, or the flighty madcap type, one can look for other qualities in subsequent partners, but if one relationship is going to be permanent, an entirely different set of characteristics may be preferable within that constraint. The same principle applies to less personal decisions. Driving a car between two cities is a continuously reviewable, variable or even cancellable decision. Taking an airplane between the same two cities is a “package deal.” Once the plane is airborne, the passenger’s second thoughts about alternative destinations, side trips, companions who would add to the pleasure of the journey, optimal arrival time, or whether the trip was a bad idea in the first place, have no effect on the flight, unless he is prepared to incur the cost of hijacking the aircraft. No small part of the appeal of the automobile, which social critics are quick to attribute to irrational drives, derives from its incremental and continuously reviewable decision-making potential — which is curtailed to varying degrees by alternative transportation modes.

In economic transactions, package deals are often vulnerable. The Ford Motor Company’s loss of its early supremacy in the automobile industry to General Motors turned on its insistence on offering the famous Model T as a “package deal,” involving not only a given mechanism but also an unchanging body style and a single color (black), whereas General Motors supplied cars in a variety of annually changing models and in virtually every color of the rainbow. For a producer to offer a package deal is to gamble that he is correct simultaneously in his assessment of the acceptability to the consumer of all of the elements in the package. Even a small “package” presents serious problems in this regard. If the producer’s chances of being right on each of three variables is 75 percent for each variable, his chances of being right on the whole package are less than half (27 out of 64).¹⁰ The variety of models of many products is one response to the hazards of trying to guess what specific combination of characteristics will appeal to the consumer. The inability of the producer to know precisely what the consumer wants is a basic fact of life under any economic system. Different varieties of the same basic product are one way of dealing with this inescapable fact, and not an arbitrarily imposed “waste” as sometimes claimed. The consumer can be presented with a single take-it-or-leave-it “package” only under some form of monopoly, private or governmental.

Informal decision-making processes permit individualized decisions in another sense as well. Decisions are not as likely to become precedents constraining future decisions. Choosing cereal for breakfast today does not prejudice one’s option to choose eggs tomorrow or to skip breakfast entirely the next day. The variability and reversibility of informal decisions not only allows corrections of past judgments and adaptations to current desire for variety; it allows future planning to take place at lower cost. The more adaptability exists for a given kind of decision, the less risky it is to make plans for the future, and therefore the more likely it is that more people will make more plans in such areas. Dates are more likely to be made in cultures where this implies little beyond a short-run commitment to be at a certain place at a certain time, than in cultures where overt expressions of interest in an individual of the opposite sex, or subsequent displays of affection toward such individuals imply matrimonial intentions — and where failure to follow through brings social ostracism or even risk to life and limb. Foreign investments are more likely to be made in a country where the proceeds can be withdrawn at will in convertible currency than in a country where legal barriers make this impossible or political barriers make it costly. Similarly, the existence of such instruments of future decision variability and reversibility (i.e., nonprecedence) as brakes and steering wheels is all that makes most people willing to ride in automobiles at highway speeds. Liquidity of assets and the existence of options markets serve similar functions in the economic sphere.