Okay, but no. What kind of car should *I* buy?

[tw]

Originally Posted by glatt

Economists recently have been studying the idea of scarcity and how it causes desperate people to make poor decisions.

Described is what was called a 'cash flow' problem. It is why hedge funds were originally created. And why some need a car loan. A short term fix hoping the long term (and more expensive) bills can be paid later. If a cash flow problem does not exist, then a supplemental warranty is similar to playing 21 to get rich.

Supplemental warranty insurance is priced so that a financial instituion will make a significant profit. Odds are priced so the house wins.

A cash flow problem makes poor decisions necessary. For most, supplemental warranty insurance makes no sense.