Faith and Loyalty through the TC Lens

Send us Fan MailTransaction costs can help institutions build loyalty and commitment among their members. Starting with the biblical story of Abraham, we delve into the delicate balance of setting transaction costs to neither alienate nor diminish values. Then: loyalty filters. The civil service of imperial China.  Email spam.  "The Word of Wisdom", a LDS dietary and lifestyle principle. But....there are cola vending machines at Brigham Young University, a seeming detour from the teachings of the Word of Wisdom. Links:Genesis 22 TextWord of Wisdom Text from D&CCaffeinated drinks at "The Y."Why is SPAM so badly written? Calligraphy in the Chinese Civil ServiceGeorge Akerlof. (1983). Loyalty Filters. The American Economic Review, 73(1), 54–63. David Kreps (1990). Corporate Culture and Economic Theory ("culture" as a signalling device)Lagniappe: A note from listener J:  I was particularly interested in today's topic as I am a member of the "Mormon" faith. I remember growing up when caffeinated sodas were seen as a huge deal, you would never bring one to a church BBQ and I remember being kicked out of a friend's house for drinking a diet mountain dew. I thought you may find it funny that after almost 100 years of confusion around caffeinated sodas, the church finally clarified in 2012 that in fact, caffeinated sodas are okay and not against the word of wisdom. Many speculate that this was due to MItt Romney being thrust into the spotlight as a presidential candidate, and he often drinks diet coke, and the church didn't want to turn off potential converts who might think, "I would never join a church that would ask me to give up soda," (though that does defy the transaction costs argument). If you have questions or comments, or want to suggest a future topic, email the show at [email protected] !You can follow Mike Munger on Twitter at @mungowitz