Dear Economist,
My partner and I are ready to register for gifts and we are seeking the most efficient way to do it. Most registries allow any gift to be returned to the store for cash. Additionally, one can often find 20 per cent coupons for this store (meaning that one can return a gift worth $100 and then buy it back with a coupon for $80). Which gifts should we register for? I am worried that if we register for lower-priced gifts, then people who have a higher willingness to pay will take advantage of the consumer surplus and buy a cheaper gift. Or should we just register for the gifts we want because the opportunity cost spent returning gifts and buying new items will be too high?
Meir, New York
Dear Meir,
Many congratulations! Not on your nuptials of course, which I presume are imminent –although you do not mention them – but on your single-mindedness. Weddings can be expensive, and it’s important to focus if you are to stand any chance of turning a profit.
You’re missing a trick with this coupon business. You need to circulate coupon details along with your demands. That way, someone willing to spend $80 will have to buy a $100 gift – because they know, and know you know, that the coupon was available. You can then parlay the $100 into a $125 gift if you wish.
As for the price range you choose for these gifts, best to offer a broad selection. This will maximise the extraction of consumer surplus from your guests, who will have varying willingness to pay. This is one splendid occasion when people will not try to secure a bargain: you can be sure they will buy the flashiest gift their budget allows.
My only puzzlement is at this talk of opportunity cost. Enjoy yourself! Is there any more enjoyable part of a wedding than squeezing money out of the guests?
Also published at ft.com.