Opportunistic behavior

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Over the course ofour lives we will often encounter opportunistic behavior. This is not necessarily always a bad thing as it forms part the entrepreneurial mindset of seeing a gap and jumping into it.


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It can however be a bad thing if the intentions behind the opportunity are bad. If the opportunity at hand is at the cost of another person.

The economic assumption is that people are both rational and opportunistic. It can also be difficult to distinguish honest and dishonest people apart until after they have taken advantage of the situation. One measure against this is reputation. We all know how important this can be as it gives us the best indicator of a persons actions in the past. Past actions are the best measure of future actions and should be treated accordingly.

If a person is known to have delayed paying debts in the past there is every chance that were you to loan them money then they might be slow to pay that back too.

The other deciding factor in a lot of cases is information. How much can you find out about the other party in the transaction?
What kind of reputation do they have?
Where can you go to find out more about the other party. Online, peers, local knowledge ect… Due diligence lower the risk of opportunistic behavior as you have more knowledge going into any transaction.

Case study for Economics:


Suppose you are on a family holiday in France. You have brought your car with you in the ferry and you are about to spend two weeks in La Loire. Bad luck strikes and your car breaks down at your destination. You have to go to a local garage to get it fixed. You bring your car in the morning and return in the evening to collect it. There is, of course, the problem of the possibility of opportunistic behavior by the garage: the garage can misrepresent the amount of time spent on fixing your car. Do you expect that the problem will be more severe or less severe than when you take your car to the garage in Ireland?
Why?



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I would look at this from the two factors that I find most important when making a transaction. Information and reputation.

The more that you know about the other party going into a transaction the better. Without information, then yes you are more likely to encounter a problem than in a local garage as you cannot make an informed choice of garage to use. For any transaction you should do your due diligence and establish the reputation of the other party.
There are many sources of information and you can be prepared long before you go to make the transaction.
You can,
Search online for reviews.
Price the work, costs, alternative garages.
Local knowledge.

Information decreases the chance of a person taking advantage of the situation and their reputation form past transactions says a lot about their behavior and rational. In Ireland you would have a lot more information to start with but this gap can be closed by time and research to be prepared.

The other consideration is future reputation as if the transaction turned out badly. You voice would carry a lot more strength back in Ireland where you have your own reputation as opposed to France where it would not be as relevant to the business and it’s customers That provides a lot more incentive on the Irish garage to perform well over the French garage who would not have to worry as much about their reputation form the transaction.

Reputation carries weight


This is true but is decided by a lot of factors. As shown in my answer above our reputations are powerful things but only in certain circles. On hive I would hope that my name carries a good reputation across the chain but if I were to put financial advice on reddit they would not know me, my past dealings or my reputation that has been built over the years in this space. They could do the research but it does make a big difference.

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1 comments
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Reputation is a very important factor. If you have a good reputation, people will be happy to pay you back extra because they trust you.
If you have a bad reputation, even if you offer the service for less price does. It matter if it’s a world call service, people won’t believe you and rather go for expensive one which have more reputation and trust.


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