Friday, July 28, 2006
Why I Like New Experiences
In my view, there are two main reasons to try new things. First, there may be some risk loving (convex utility) involved in choosing meals (and to a lesser extent vacations) because people like to consume the adventure of trying something new. However, I will point out that the phenomenon of always trying someplace new is really a Manhattan (or large urban area) specific dilemma. Because restaurants must be high quality to survive in Manhattan’s crowded food market, there really is not a whole lot of risk involved. The average restaurant in Manhattan is probably better than the best restaurant in 90 percent of the US. Most people in most places are like Tony V. They have a short list of places they like and the visit those restaurants over and over; only occasionally trying something new to see if it is worthy of visiting again. There are a few really risk loving people who will eat anything from anywhere, but your basic “adventurous” foodie primarily wants to try new, but clearly high quality (i.e., relatively low risk) food. They can do this in Manhattan, but it is difficult to do most anywhere else.
The second (and more important) reason to try new stuff are memories (which make that experience a durable good). The memory value of new experience, I think, explains the rapidly diminishing returns which in turn explain the need to keep looking for new stuff. By visiting a restaurant or vacation location once, I get several valuable things – I’ve now seen, heard, smelled, tasted, and felt that place and can recall these experiences later either to enjoy on my own or (and this is essential) to share with others. Now many argue (correctly) that to really know a restaurant or place one needs to spend a fair amount of time there, but one can get pretty far with a short visit. I spent 3 days in Rome once. Does this mean that I really know Rome? Certainly not, but I can still remember what it was like and have several specific stories that I have told many times to many people. To reach the next level of understanding likely requires that I actually live in Rome for awhile. As such, I get a big kick in memory value from one short visit. This implies that there are fairly rapidly diminishing returns to goods that derive a large fraction of their value from memory.
Thus, for me, it is easy to see how in many situations the expected marginal utility of a new, “risky” experience is larger than the expected utility of repeat experiences -- particularly when, as is the case with Manhattan restaurants and most vacation spots, there is not an enormous amount of variation in the quality of the choices.
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