Best Buy Risk Tolerances
The reading for this week touched on risk tolerances, and how people will pay premiums to avoid risks. Best Buy is a company who thrives off of people’s willingness to pay extra money to avoid risks. They sell warranties on many of their products to shift the risk onto themselves instead of the consumer. This might sound attractive to a consumer, until they see the price tag. Their warranties on a four hundred dollar TV are around fifty a year. This is a great price if you plan on destroying your TV, but for most consumers who take care of their items, it is fifty dollars wasted.
Best Buy profits off of the consumers who are risk adverse. If you buy a new tablet and are worried it will get wet or the screen will crack, Best Buy will offer you
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