Efficent Market Hypothesis: irrational to compare prices?
Is it irrational to compare prices / read reviews for highly commodity things like desktop computers and monitors given the efficient market hypothesis? Does it make sense to spend time reading reviews at all?
3 comments
If you believe that the market has zero friction (and I don't think you'll find any economists who believe that) then there is no point comparing prices.
Reading reviews is worth doing for non-commodities -- which is to say, reading reviews is worth doing whenever reviews exist. You won't find reviews comparing bricks of 99.9999% pure gold with each other; there would be no point. But you certainly do find reviews of computers: The best computer for one person is not necessarily the best for someone else -- computers are not commodities.
Reading reviews is worth doing for non-commodities -- which is to say, reading reviews is worth doing whenever reviews exist. You won't find reviews comparing bricks of 99.9999% pure gold with each other; there would be no point. But you certainly do find reviews of computers: The best computer for one person is not necessarily the best for someone else -- computers are not commodities.
it isn't irrational to do either.
reading reviews isn't about the power of the dollar you're spending, its about ensuring the purchase you're making is the one you want. you can spend money and be assured that you're buying something worth the money. but the question is whether you actually want that thing that is worth the money you're spending.
comparing prices is getting less worthwhile, especially if you take a lot of time to do so. but it can be worthwhile depending on the case.
reading reviews isn't about the power of the dollar you're spending, its about ensuring the purchase you're making is the one you want. you can spend money and be assured that you're buying something worth the money. but the question is whether you actually want that thing that is worth the money you're spending.
comparing prices is getting less worthwhile, especially if you take a lot of time to do so. but it can be worthwhile depending on the case.
its not rational to take any action thats based solely on an unproven hypothesis.