Sunday 1 April 2012

I'm not panicking about fuel, i'm rational!

Have you noticed that when people where interviewed in the petrol queues recently, it was not them that was panic buying just everyone else?

The strange thing appears to be that this is indeed the case for everyone. Each individual was not panic buying but making a prudent decision to ensure that they had some petrol for perfectly rational personal reasons. I too felt the mental tug to consider refueling. Had my car's tank not been three quarter's full, I might have done so.

What causes these individual choices that collectively have unintended consequences, like causing a fuel shortage that we were trying to avoid?

The plethora of psychologists commenting on the web had a common underlying message. Overall, the analysis is as follows:

We are told on the one hand that there will be a potential fuel tanker strike in the near future.
The government says, do not worry, just think ahead a bit and plan.
We think, if the government say there is an issue but we shouldn't worry, then there must be a slightly worrying issue, otherwise why would this have been brought to our attention.
The situation is now very much like the game theory of the "prisoner's dilemma" - we look at four potential choices:
  1. I do not buy fuel, everybody else does not buy extra fuel, fuel stocks OK for the moment
  2. I do not buy fuel, everybody else buys fuel, it runs out and I get none when I need it
  3. I do buy fuel, everybody else does not buy fuel, so I'm OK
  4. I do buy fuel, everybody else buys fuel, at least I'm OK for the moment
The temptation to buy earlier rather than later is there. Some people do go ahead and buy fuel. Others wait until we see what the rest are doing.

Then the media announces that there is an increase in fuel purchases at the pumps.

So for those who have not bought yet, the balance shifts. Options 1 and 3 no longer apply. If I do not buy fuel now, I might not get any later. If I buy now at least I'll be OK.

More people arrive at the pumps - the media start talking of "panic buying". This reinforces my choices. If everyone else is panicking and looking out for themselves, it is only logical that I too buy if I have not already done so.

I'm rational - it is everyone else who seems to be panicking! Yet like me, they are making the same rational choice.

And so, with our impeccable individual logic we collectively create the crisis we were trying to avoid in the first place!

Some links to psychologist's comments and the prisoner's dilemma here.

No panic for petrol
The logic of panic buying
Should you panic buy fuel? A true prisoner's dilemma
Media to blame for panic buying

Other advice on saving fuel:
Cheap Petrol & Diesel - Cut your fuel spend by a third

Ideas and concepts communicated simply.

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