How can bogus claims and inferior audio thrive in a competitive market?

[ahofer]

Used cars are a go-to example for Asymmetrical Information, although now you can order a VIN report in the US and know the crash history and get a sense of maintenance. In the old days, only the used car salesman and his mechanic knew. This is why they have such a great reputation - hard to resist taking advantage of it, especially when your continued employment depends on it.

I had a back-and-forth in another thread with..was it @BDWoody ? About extended warranty. That's another case where the vendor/manufacturer have a pretty good idea of the probability of an insured problem, and you don't. Then they take advantage of your loss aversion to sell you an overpriced policy (almost entirely). Now, Woody (if it was him) claimed the seller didn't know his kids and their destructive tendencies. True! All they need to know is that there aren't too many customers with such kids *on average* to still make a profit selling extended warranty. With N=1, anything can happen. Of course, most warranties don't cover abuse, so that's another thing.

Are lottery tickets asymmetry? The odds are published and figurable. But buyers are rarely equipped with the skills to calculate the odds, let alone to understand (grok?) how small a really small number is (or how big a really big number is). Inability to deal with very large or small quantities is another known behavioral bias.

 

[ahofer]

Added the bit about the Money Pump above. I wish I could locate that recording, I've found it online before.

 

[BDWoody]

Used cars are a go-to example for Asymmetrical Information..

I had a back-and-forth in another thread with..was it @BDWoody ? About extended warranty...

Then they take advantage of your loss aversion to sell you an overpriced policy...

.

I don't believe it was me... Not generally a believer in extended warranties for items I can easily underwrite. I could give exceptions worth considering where it may not be irrational, but I agree with your point completely.

Market efficiency, which is simply information efficiency in general, takes away long held advantages. The availability of information on this site I believe helps shifts the balance towards a more efficient audio market...for example. That's a good thing.

 

[JohnYang1997]

Because they they love people who don't question anything and take it as fact. The Ciem/IEM market runs on they flawed logic that multi driver set up is good when the crossover is laughably basic. Yet the GR8e and ER4SR fly away with one BA driver. Now you have swim through people who blindly assume the ER4S is bad because of its set up without trying it or act there ignorance is fact. I had a user flame me that did a ER4B impression on Reddit/Head fi, Go on how the ER4S is crap because of being Single BA by just parroting opinions and basing everything on a old HF5 that nowhere near the quality of ER4.


Going by your cable quote that a audiophile pretty much admitting they're wasting their money while lashing out at others who do actual research. Not silly enough to assume if it's £700+ is must be a massive jump over a HD600/ER4 on sound quality.

Just one thing to correct. Hf5 is basically the same as er4. It uses sonion 2389 which is sonion equivalent of knowles 29689. By adding resistance in line with cable you get the sound of er4s.
I'm more concerning about the seal, the insertion and the preference of elevated bass or V shape sound etc rather than hf5 being inferior than er4, even on stock hf5 is still miles ahead most of other products.

 

[Blumlein 88]

snippage...............

Are lottery tickets asymmetry? The odds are published and figurable. But buyers are rarely equipped with the skills to calculate the odds, let alone to understand (grok?) how small a really small number is (or how big a really big number is). Inability to deal with very large or small quantities is another known behavioral bias.

I once worked where almost everyone loved to bet on greyhound racing. The parimutuel betting rules were simple. However much money is bet, they took 12% and paid out the rest. They also had a very simple system for insuring you could never reliably bet in a way that was better than random chance. So best long term results were going to be you come home with 88 dollars for every 100 you bet. Now there were odds, and tips sheets, and various methods. None of it could surmount the basic realities to let you get a positive 12% or greater outcome vs random. Your safest bet was to bet on the favorite in each race to win, place or show. Of course that isn't a sexy bet promising big winnings. I collected data on hundreds of races to show them. Didn't make any difference. Never convinced a single person. Even though several kept records of what they were doing and long term results were a near perfect match for my predictions. Stories are something people want to believe in. This despite several people having the kind of education they could understand what I was telling them. It just wasn't what they wanted to hear.

 

[Hypnotoad]

This despite several people having the kind of education they could understand what I was telling them. It just wasn't what they wanted to hear.

On another forum frequented by people with way too much money, they seem to be intelligent educated folk, it's surprising though that they buy and sell every latest questionable fad item available. After spending several thousands on some super rhodium filled power cable, they quickly sell it for a huge loss and usually the reason given is upgrading to an even more expensive model.

 

[suttondesign]

Something to also keep in mind is that high end audio is a niche within a niche which exists in an almost incestuous echo chamber and which is all but irrelevant to all but a handful of people.

For sure. I have never had a close friend or acquaintance who had any idea what my own equipment is or what it does, and I have been into audio since 1978. Sorry, that is wrong: I have one buddy in Boston who asks me what I like then buys it.

 

[ahofer]

I once worked where almost everyone loved to bet on greyhound racing. The parimutuel betting rules were simple. However much money is bet, they took 12% and paid out the rest. They also had a very simple system for insuring you could never reliably bet in a way that was better than random chance. So best long term results were going to be you come home with 88 dollars for every 100 you bet. Now there were odds, and tips sheets, and various methods. None of it could surmount the basic realities to let you get a positive 12% or greater outcome vs random. Your safest bet was to bet on the favorite in each race to win, place or show. Of course that isn't a sexy bet promising big winnings. I collected data on hundreds of races to show them. Didn't make any difference. Never convinced a single person. Even though several kept records of what they were doing and long term results were a near perfect match for my predictions. Stories are something people want to believe in. This despite several people having the kind of education they could understand what I was telling them. It just wasn't what they wanted to hear.

read that transcript of Sarah Lichtenstein and one of her subjects. It’s amazing. She also replicated the experiment in a casino with “experienced” gamblers and got the same result. Really shakes your faith.

 

[watchnerd]

Read it! (and clicked all the links)
In my mind, you can summarize the story of ASR as "the rebel objectivists who fight with science against the kooky subjectivists". I like this narrative and I sympathize with it, and that's why I'm writing in this forum. But just like the PS audio narrative serves their sales, the ASR narrative drives us to buy things like the THX AAA 789 because of the appealing story of an affordable endgame product – despite the fact that no one can really hear a difference between a SINAD of 117 and 97.

100% agree.

The ASR community seems to have drifted into "measurement fetishism", focusing on inaudible SINAD differences, in a way that isn't really supported by psychoacoustic science's understanding of listening thresholds.

Which is not particularly scientific, really.

Oh, ASR, how ironic you have become.

Which is why I've lobbied for an "audibility threshold" line on the SINAD graph, but nobody else seems to like the idea.

Maybe because people don't want to recognize it / hear that story, similar to @Blumlein 88 greyhound better example. Don't bust the narrative.

 

[CDMC]

I once worked where almost everyone loved to bet on greyhound racing. The parimutuel betting rules were simple. However much money is bet, they took 12% and paid out the rest. They also had a very simple system for insuring you could never reliably bet in a way that was better than random chance. So best long term results were going to be you come home with 88 dollars for every 100 you bet. Now there were odds, and tips sheets, and various methods. None of it could surmount the basic realities to let you get a positive 12% or greater outcome vs random. Your safest bet was to bet on the favorite in each race to win, place or show. Of course that isn't a sexy bet promising big winnings. I collected data on hundreds of races to show them. Didn't make any difference. Never convinced a single person. Even though several kept records of what they were doing and long term results were a near perfect match for my predictions. Stories are something people want to believe in. This despite several people having the kind of education they could understand what I was telling them. It just wasn't what they wanted to hear.

It’s just like Vegas. I remember when they used to advertise the slot payouts for Tahoe and Reno casinos. 99.2% payout, or as it should really be called only a .8% loss per hundred dollars for the player.

 

[Killingbeans]

Which is why I've lobbied for an "audibility threshold" line on the SINAD graph, but nobody else seems to like the idea.

I like it! Would be a nice subtle sanity check

 

[direstraitsfan98]

That IS the market. Bogus claims and inferior audio.

 

[ahofer]

I like it! Would be a nice subtle sanity check

Count me in. Add explicit measurement tolerances that would be audibly indistinguishable (under normal operating conditions blah blah blah).

 

[nhunt]

I think there is an element of gambling to it, too. Especially in the headphone market. People buy the next headphone or non-neutral peace of gear to see if this combination might sound as good as everyone says (“the hd650 is a headphone that scales really well with the most expensive gear you can throw at it”). Occasionally something changes the FR in a pleasing way and gives a dopamine rush and encourages them to take a gamble on some more equipment with little evidence behind it.

 

[Newk Yuler]

Every time someone starts another one of these threads about challenging audiophoolery I invariably find myself wishing a similar objective scrutiny would get applied and openly discussed about religion and those who are convinced of its realities and virtues.

The genius kid in my avatar had a line in a recent episode of his TV show that had me laughing out loud which is pretty rare for a Chuck Lorre show. He was in an argument with his religious mom about her questioning his sanity and challenged her saying "You talk to an invisible man in the sky that grants wishes..." It invariably occurs to me there are similarities between the ASR purists' assault on imaginary virtues in poorly measuring audio equipment and the apparently subjective benefits of worshiping an "invisible man in the sky." One can easily interchange the religious mom and her genius son for someone convinced a $1k audio interconnect cable sounds better than a well engineered $40 cable and an ASR purist who bases his belief on Amir's apparently real scientific measurements.

Sorry if this may seem off topic, but I don't see it that way. Really more of something that could be discussed in more appropriate section of ASR. Maybe some of you ASR purists convinced of the benefits of a religion can explain how it works while you're also convinced everyone believing a poorly measured piece of audio equipment can sound better only if a person is gullible.

I really don't intend to derail this thread, so I apologize for that. It's just that it's another ASR thread about challenging audiophoolery.

 

[ahofer]

Every time someone starts another one of these threads about challenging audiophoolery I invariably find myself wishing a similar objective scrutiny would get applied and openly discussed about religion and those who are convinced of its realities and virtues.

The genius kid in my avatar had a line in a recent episode of his TV show that had me laughing out loud which is pretty rare for a Chuck Lorre show. He was in an argument with his religious mom about her questioning his sanity and challenged her saying "You talk to an invisible man in the sky that grants wishes..." It invariably occurs to me there are similarities between the ASR purists' assault on imaginary virtues in poorly measuring audio equipment and the apparently subjective benefits of worshiping an "invisible man in the sky." One can easily interchange the religious mom and her genius son for someone convinced a $1k audio interconnect cable sounds better than a well engineered $40 cable and an ASR purist who bases his belief on Amir's apparently real scientific measurements.

Sorry if this may seem off topic, but I don't see it that way. Really more of something that could be discussed in more appropriate section of ASR. Maybe some of you ASR purists convinced of the benefits of a religion can explain how it works while you're also convinced everyone believing a poorly measured piece of audio equipment can sound better only if a person is gullible.

I really don't intend to derail this thread, so I apologize for that. It's just that it's another ASR thread about challenging audiophoolery.

I don’t think anyone was promoting religion here. However, if you wanted to suggest an alternate construction of the above argument: Does the incredible market success of religion mean it is true? I would argue the same side, although with somewhat different arguments. Religion has utility or value to many, but that utility is not necessarily grounded in it being provable or factually accurate.

Religious people speak broadly about “faith” and “miracles” to acknowledge this. However, audiophiles generally do not.

 

[Thomas savage]

100% agree.

The ASR community seems to have drifted into "measurement fetishism", focusing on inaudible SINAD differences, in a way that isn't really supported by psychoacoustic science's understanding of listening thresholds.

Which is not particularly scientific, really.

Oh, ASR, how ironic you have become.

Which is why I've lobbied for an "audibility threshold" line on the SINAD graph, but nobody else seems to like the idea.

Maybe because people don't want to recognize it / hear that story, similar to @Blumlein 88 greyhound better example. Don't bust the narrative.

Agreed and ironically it's creating another flavour of ignorance rather than increasing people's knowledge base.

People find safety in absolutes and that's very seductive.

 

[GrimSurfer]

First of all, I'd like to thank @ahofer for writing this piece. It took time, energy, and coherent thought to lay all of this out for us.

I can sign-on to 90% of what has been presented, if for no other reason than it largely explains consumer and audiophile behaviour.

So here's the 10% of the equation I'm having difficulty reconciling...

Cost aversion and signalling may not be entirely discrete drivers. Anyone identifying as an audiophile should be able to legitimately claim some demonstrable expression of their expertise. Under this construct, component ownership takes on greater meaning than brand loyalty or the ability to seek out bargains. It represents the physical expression of the sum of their knowledge as an audiophile divided by their disposable income.

Said another way, audiophiles appear to maximize their legitimacy by choosing the best possible gear at an affordable price. Through some magic of thinking, however, "affordable" is often rationalized as the lowest possible price. This introduces the issue of balancing the very likely risk of not being able to find or afford excellent performing gear through an unusual or illogical level of frugality.

Under this construct, losses in performance are simply "explained away" by pointing out the small size of the denominator. Doing so places dollars ahead of sense. As this doctrine is taken fully onboard, performance loses its high value and is replaced by the clumsy view that inexpensive is good. After all, if good = performance/cost, than large values are possible by spending as little money as possible.

"Sure it has a SINAD of 50 dB, but it has nine 100W channels, an onboard DAC and phono circuit, Bluetooth, EQ, and only cost me $200!" [features and price of greater apparent value than SQ]

"I know it measures poorly, but it only cost $10." [poor performance, good value, or a waste of a ten-spot?]

I no more understand such rationalizations than I do the one that dictates that something is good because it costs a lot. Why? Because doing so places SQ in a position lower than other things, which is inconsistent with what audiophiles (often, hypocritically) say is the most important thing to them.

 

[scott wurcer]

I had a back-and-forth in another thread with..was it @BDWoody ? About extended warranty. That's another case where the vendor/manufacturer have a pretty good idea of the probability of an insured problem, and you don't. Then they take advantage of your loss aversion to sell you an overpriced policy (almost entirely). Now, Woody (if it was him) claimed the seller didn't know his kids and their destructive tendencies. True! All they need to know is that there aren't too many customers with such kids *on average* to still make a profit selling extended warranty. With N=1, anything can happen. Of course, most warranties don't cover abuse, so that's another thing.

You seem to have a bee in your bonnet about insurance. My financial adviser had a client who didn't bother with a personal all hazard umbrella policy, $200 or so a year for $4M coverage. During one of our NorEasters his wife backed out of their driveway over one of their neighbors crippling her for life. The first court action in discovery was to tabulate their entire assets.

 

[watchnerd]

Agreed and ironically it's creating another flavour of ignorance rather than increasing people's knowledge base.

People find safety in absolutes and that's very seductive.

Maybe you can help us lobby for the audibility threshold in the SINAD graph.