Kevin86475391 wrote:The heart and soul of most economic and especially capitalist theories is the so called "Rational choice theory" that assumes that consumers and on a larger scale companies behave in a rational way that is best for them. Now personally, I think it's pretty clear that they DON'T. People behave irrationally all the time and in turn also lead the corporations they're running to behave irrationally. However, I think it's still a completely valid starting point and a sort of ideal to be sought. I also happen to personally think it's GENERALLY completely ethical for people and corporations to behave rationally and maximize benefit/profit. Of course it must be tempered against wild abuses of exploitation, but generally I would never fault an individual or a company for behaving in a way that most benefits them.
So that said, I have zero problem with people 'chasing' benefits and bonuses, signing up, getting them, and then hitting the road before the annual fee comes due. Likewise, I don't have a problem with credit card companies legally looking for opportunities to raise rates and charge people "hidden" or unexpected fees (as long as they really were disclosed in the agreement and the consumer could have found out had they done due diligence). Credit card companies want to make money; consumers want to save (or even make) money. Both those things are fine IMO and obviously the reality is that credit card companies make money on some people and lose money on others. By and large they CLEARLY make a lot more than they lose.
yfan wrote:Let's extend the rational choice theory for a second. Certainly, a consumer has rational interest in the benefits and rewards structure of a card being maintained long term and not being chipped away or even crippled from churning and bonus chasing. At the minimum, those who are doing this are undermining their own long term rational interests by going after short term gains. Not that much different from euphoria in the market around quarterly earnings reports that often miss long term financial health of companies.
It is also in a non-bonus chaser's rational self interest to keep bonus chasers at bay as much as possible, by discouraging the practice, including by the use of sound ethical arguments.
But more broadly, just as you said, banks have rational interest in limiting this type of behavior in order to make their products (more) profitable.
CarefulBuilder14 wrote:Consumers don't feel gains and losses as they affect a group, outside of maybe some credit unions. Consumers just care about the gains and losses they personally experience. While we're talking economic theory, there the "stag hunt" within economic game theory. Someone can depart from a group effort because:
1. He thinks he can do better than the group, working on his own.
2. He thinks the group will fail because others will be departing out of their own self-interest.
CarefulBuilder14 wrote:Some people go through so many cards and chase so many bonuses that they end up getting an inferior rate on a mortgage or large car loan. That is irrational and against their own long-term interests.
Consumers don't feel gains and losses as they affect a group, outside of maybe some credit unions. Consumers just care about the gains and losses they personally experience. While we're talking economic theory, there the "stag hunt" within economic game theory.