Jesse · Market Structures

Uncut Pizza

As the party unfolds, Badger orders a pizza from a special venue, which charges lower prices by not slices their pies. Jesse is not at all impressed by this sales approach and, in fact, is a bit irritated. Nevertheless, Badger attempts to link the resources spared by doing away with the pizza-cutting process and the savings passed onto the consumers. While this approach implies significant resource savings on a larger scale, the benefits may not outweigh the costs on an individual (i.e., consumer-by-consumer) basis.

See more:

Gus · Healthcare · Jesse · Mike

Medical Incentives

Gus and Mike have both been shot. However, the personnel at temporary medical facility they found themselves in only focus on saving Gus. Jesse is frustrated by this because Mike and he are very close. Nevertheless, the doctor points out that Gus is the priority because he is the one paying his salary. This is also visible in our current medical system. Specifically, those who have the ability to pay often receive priority and extra-quality healthcare, which may not be equitable, but may be, perhaps, efficient.

See more:

Foundations · Gus · Walter

Parking Lot Decision

Gus and his people leave the meeting at the hospital with Jesse and head back to their car in the parking garage. As they approach the car, Gus stops and begins to look around at the rooftops around the garage. Walter is on a nearby rooftop and hides as Gus stands right across from him waiting and thinking. He decides to abandon his car, as he fears it may be a trap.

See more:

Foundations

Paying the IRS

Skyler decides to force Ted, her previous employer, to pay his outstanding debt to the IRS. Huell and Patrick visit Ted and strong arm him into writing a check for those back taxes. After signing the check and seeming to cooperate, he decides to make a run for it instead. He takes off running, slips on his rug, and slams head first into his cabinet breaking his neck.

See more:

 

Behavioral & Game Theory · Jesse · Walter

Inertia

Walter stops by to see Jesse. Reminiscing about the start of their partnership, they cannot help but wonder about sticking with the old recreational vehicle (RV) even when there was enough to replace it. While the RV served them well in their first attempts to cook methamphetamine, the two did not upgrade until they started working for Gus Fring. The ownership/endowment effect underlines the scenario in which some people are unwilling to exchange something that they possess for the same amount of money that they would pay for it (if not owning it). Walter and Jesse loved the RV even though it had, and brought them, many problems. From a rationality standpoint, they may have been too concerned with the sunk costs that they have incurred.

See more:

Foundations

Lounging on Money

Huell and Patrick are sent to get Walter’s giant pile of money. Upon seeing it Huell and Patrick cannot resist the urge to lay on top of it. Huell suggests that they skip town with the money but Patrick points out that Walter had ten men killed, in prison, all within a two-minute window. While there’s only so much money the two can pack away, is there a threshold that would have induced the two of them to try and run away?

See more:

 

Behavioral & Game Theory

Who’s Responsible

Jesse beats Saul and forces him to confess at gunpoint about helping Walter to poison the son of his (Jesse’s) former girlfriend. In the moment, Saul needs to make a decision. He can lie to Jesse and play dumb, but he risks getting shot because of Jesse’s anger. On the other hand, he could tell Jesse the truth, confess to aiding Walter, and Jesse could still shoot him because he’s so angry. Either way, Saul must weigh the probability of being shot from telling the truth or from lying.

See more:

Foundations · Gus · Walter

Family Decisions

Gus and Walter discuss Walter’s decision to start cooking meth. Walt has debated the costs and benefits of his decisions throughout the show’s five seasons. Gus has an incentive to make sure Walter produces for him, so he tries to emphasize the importance of the benefits Walt has received and echoes how large those benefits are relative to the costs.

See more:

 

Behavioral & Game Theory · Foundations · Walter

Crush the RV

Walter rushes to the junkyard in order to make sure that recreational vehicle (RV), which he used for cooking methamphetamine and it is stored there, is destroyed. When he arrives, the junkyard owner, Old Joe, asks Walter why is he there. In doing so, Old Joe finds out that the DEA agents, who are interested in the RV, are coming there too. Further, he realizes that, as long as the RV is on his property, he could get in trouble, even if he does not actually own it. Property rights and the incentives to care for his business push Old Joe to demand Walter the RV removal. In addition to showing how property rights induce economic agents care for something they own, this video clip shows that people update their information sets and weigh costs and benefits when making decisions.

See more:

Foundations · Jesse · Walter

What’s More Important Than Money?

The benefit ($1.5 million) relative to the cost (time and effort) of cooking meth is different for Walter and Jesse. The benefits are obviously lower than the costs in Jesse case but not for Walter; as he seems happy with trading his time and effort for the cash. Even with clear and predictable benefits, people’s own subjective costs of their time can still make them disagree on the cost benefit analysis.

See more:

 

Foundations · Labor · Skyler · Walter

Was it Worth It?

Walt weighs the costs and benefits of his decision to start producing meth. The benefits are clear, the money will cover college tuition, tutors, mortgage payments, and all future expenses. The costs have been larger than Walter could imagine, but he believes all the benefits have outweighed the costs of his decisions.

See more:

Foundations · Labor · Skyler

Not Worth Turning Him In

Is it worth Skyler’s trouble to turn Walt in for making meth? She discusses this decision with her lawyer, but can’t seem to convince herself to go through the process. In this scene, Skyler is audibly weighing the costs and benefits of her decision. The lawyer seems to think that the benefits of turning her husband in outweigh the costs, but Skyler decides otherwise

See more:

Foundations · Gus · Walter

Not Worth the Money

It’s time for Walter to quit so he stops by to visit Gus Fring. Gus wants to offer Walter 3 million dollars to keep making his blue meth for 3 more months, but even that amount isn’t worth it to Walt. Walter is trying to piece his life back together and believes that continuing to produce his blue meth isn’t worth the amount he’s giving up. Walter admits to Gus that he has more money than he knows what to do with. Even for the wealthy, there’s diminishing returns to acquiring more income.

See more:

Foundations

Clothing Exchange

The criminal twins are looking for new clothing so that they don’t stand out as easily in the desert. They come across a family’s clothesline and begin changing. The family easily decides that the cost of confronting the twins isn’t worth the benefit of keeping their clothes. Their silence is rewarded because the twins know the benefit of fresh clothes is worth more than the car they were driving. This exchange shows two differ sets of people considering whether benefits outweigh costs.

See More:

Behavioral & Game Theory · Foundations · Growth · Macroeconomics · Skyler

Faulty Accounting

Skyler speaks to Ted Beneke (her boss) about some underreported income, which she found while analyzing the company’s accounting records. Initially, Ted labels this as an accounting error, but soon admits to underreporting income in an attempt to avoid paying more in income taxes. From this conversation, it’s clear that Ted purposefully engages in this illegal activity by taking into account the costs and benefits of his decisions. The scene is also useful for discussing the decline in tax receipts during a recession as well as its potential causes. Skyler also has to weigh the costs and benefits of reporting her boss (and friend) to the IRS.

See more:

Foundations · Jesse · Labor · Walter

Uprooting Your Life

Tuco is getting worried and suggests that they all move to Mexico so that the government will stop tracking them. Walter and Jesse aren’t keen on this idea because it means they’d have to give up their family, and that’s a cost Walter isn’t willing to make, even for lots of money. The whole reason he started making meth was to support his family, but Tuco doesn’t seem to understand the issue. He suggests that he can just get another family, implying they are substitutable.

See more:

 

Foundations · Growth · Jesse · Labor · Macroeconomics · Walter

Paying for College

After watching a gruesome beating, Jesse and Walter are officially scared of their new distributor, Tuco. Walter starts to calculate just how much money he needs to earn selling meth in order to take care of his family. Becker’s theory on the rational criminal suggests that criminals take the time to calculate the costs and benefits before committing their crimes. Walter is even careful to consider future inflation changes as he determines the appropriate amount to “invest.”

See more: