Travel agents have recently reported a new money making scam . The basic idea is to set up a bogus website selling chalet holidays in ski resorts, or to more simply sell a chalet holiday that does not exist. This scam particularly caught my attention because we often book online chalet holidays! And the emotions reading about it aroused were primarily ones of fear and mistrust - this could happen to us and so maybe we should not buy holidays online anymore. The costly-to-fake principle is a nice way to try and make sense of all this. In any economic transaction there is an element of uncertainty, because you cannot have perfect trust in the person you are trading with. When we book a ski holiday we have to put some faith in the travel agent to deliver what is being promised. Similarly the travel agent has to put faith that we will pay on time and not trash the chalet. Ideally we would like to reduce uncertainty as much as possible by trading with people we ...
Some random thoughts on game theory, behavioural economics, and human behaviour