However so you will not be surprised to find that

however, so you will not be surprised to find that suicide rates do increase after the exclusionary period
has passed. Countries with shorter exclusionary periods also seem to have higher suicide rates.
(See Yip, P.S., and F. Chen. 2014. A study on the effect of exclusion period on the suicidal risk among the
insured. Social Science & Medicine, 110: 26–30; and Chen, Joe, Yun Jeong Choi, and Yasuyuki Sawada.
2008. Suicide and life insurance . No CIRJE-F-558, CIRJE F-Series, CIRJE, Faculty of Economics, University of
Tokyo.)
13. You are driving on a trip and have two choices on the highway to stop for a snack: a well-known chain
or a local restaurant that you have never heard of but that looks okay. What lessons from this chapter
might lead you to choose the chain even if you think that their food is just average? Might you choose
differently if you had access to the Internet? Might you choose differently if these two choices were in
your neighborhood?
Solution
13. Restaurants on the highway serve lots of nonrepeat customers. As a result, the costs to them of
serving a poor meal are lower than the costs to a neighborhood restaurant, which relies on repeat
customers and word of mouth. If the local highway restaurant serves you a bad meal, for example, what
are you going to do—never eat there again? But you probably weren’t going to eat there again even if
they served you a great meal! On the other hand, if the chain restaurant serves you a bad meal, you can
still punish the chain. The chain relies on repeat customers even if they don’t rely on repeat customers at
each particular location. As a result, the chain has a greater incentive to keep its reputation strong and
its quality high, even on the highway.
You might choose differently if you had access to the Internet and could check restaurant reviews on Yelp
or other services. First, and most obviously, you would have better information about the local
restaurant. Second, if lots of people do this, then you don’t actually have to check the Internet. Just
knowing that lots of other people check the Internet means that the local restaurant also has a
reputation to maintain and is probably pretty good. By the way, McDonald’s and many other chains were
often very successful on highways in the age before the Internet precisely for these reasons—they may
have been average but they were consistently average and never let you down too much. With the
advent of the Internet, we may expect to see more diverse and local restaurants even on highways.
If the two choices were in your neighborhood, you might choose differently. First, you know the local
restaurant has to maintain its reputation to survive. Second, the value to you of experimenting is higher
when eating locally. If you discover a great local restaurant, you can go back there many times!

7
Challenges
14. Consider a restaurant that wants to avoid kitchen fires. The restaurant could make many investments
both to avoid the fires in the first place and to quickly and safely put them out if they do occur. Suppose
that the marginal cost ( MC ) and marginal benefit ( MB ) of these investments in fire control technologies
is illustrated in the following figure.