If capatilism was working the way it was supposed to, the customer could choose between paying more up front, but having the option of a "free" return, or paying less upfront byt having to pay for a return (or not be able to return it).
And for that matter, the customer would have enough information to know the quality of the product before purchasing, but that is often not possible.
Everybody knows the cows are not actually spheres. It's about how you deal with it.
If you try to sell "return insurance" then some customers don't buy it but end up wanting to return it anyway and then leave you a bad review for not having free returns. That costs you more than charging somewhat higher prices and having free returns, so that's what you do instead. But now efficiency requires some other mechanism of allowing the people who don't do excessive returns to pay a lower price.
Also, suppose you actually did sell return insurance. Then you notice that a subset of the customers who buy return insurance rarely use it, so you want to give them a discount to try to get more of their business.
Your idea of charging less to customers who know what they want is also a spherical cow.
They’ll buy your entire life from a data broker and charge you more because yesterday you accidentally viewed some Lamborghini seat covers. They’ll calculate that you have less willpower on Thursday nights and change their advertised price from $10 to ON SALE $2 off $12. They’ll just do coincidentally use the same algorithm to determine their price as all the other stores do so they don’t have to worry about competing on price.
> They’ll buy your entire life from a data broker and charge you more because yesterday you accidentally viewed some Lamborghini seat covers.
You're describing incompetence. You're not actually rich just because you viewed something by accident which means you're not actually price-insensitive and they just lost the sale to someone else. That has nothing to do with algorithms, incompetent companies put themselves at a disadvantage and make fewer sales than other companies all else equal, and the ones that are sufficiently bad at it go bust.
> They’ll calculate that you have less willpower on Thursday nights and change their advertised price from $10 to ON SALE $2 off $12.
They do that regardless of whether it's Thursday.
> They’ll just do coincidentally use the same algorithm to determine their price as all the other stores do so they don’t have to worry about competing on price.
This again has nothing to do with algorithms. They can do the same thing by just looking at the prices other merchants are charging and setting the same ones, and if you really want to prevent this then the law you want is the one that prohibits manufacturers from enforcing "no sales below MSRP" against retailers.
Because in a market with a large number of retailers, the individual retailers all have the incentive to defect from a price fixing scheme, because increasing your market share from 0.5% to 20% by having the lowest price when those other idiots are refusing to compete on price is worth way more than having slightly better margins. This is why it's important that the number of competitors be large instead of small. Laws should be directed to ensuring that rather than trying to micromanage a consolidated market full of incumbents so large they can buy the government anyway.
What if they’re not incompetent and you intentionally looked at Lamborghini seat covers, then, and correctly flagged you as willing to pay more as a result?
What if that fake sale tactic only works on you when your willpower is low and they know it?
Price fixing by software is a real thing. I agree that ensuring lots of competitors is a better way to avoid it. How would Colorado do that?
> What if they’re not incompetent and you intentionally looked at Lamborghini seat covers, then, and correctly flagged you as willing to pay more as a result?
What they're more likely to do is show you higher end products, because a rich person (or the person they hire to buy things for them) still has the capacity to compare prices for the same product and then charging more for the same thing still loses them the sale in a competitive market. Whereas if they show you the premium product instead of the base product because they've correctly surmised that you'll prefer the better product even if it costs more, is that even bad?
> What if that fake sale tactic only works on you when your willpower is low and they know it?
Then they still use it all the time because that's more effective than trying to guess when your willpower is lower and sometimes being wrong.
> Price fixing by software is a real thing.
It's a hypothetical thing where it works as long as everybody is using the same software. Like the other methods of price fixing, it stops working as soon as anybody does something different because then customers just start buying from them, and then we're back to needing to make sure there are enough competitors that that's what happens.
> I agree that ensuring lots of competitors is a better way to avoid it. How would Colorado do that?
In a lot of markets it's already the case but they're applying laws like this to them anyway. In consolidated markets, we largely already have antitrust laws and the main problem is a lack of enforcement, so maybe go chop up some large corporations.
There are also some cases when the courts issue a bad antitrust interpretation and then you need the legislature to pass a short bill that basically points to that case and says "no, the opposite of that".
Dynamic personalized pricing is a real thing. Has been for ages. The old-fashioned techniques are coupons and loyalty cards, or just having higher prices in higher-end stores. Competition isn't nearly as perfect as you say. It's very common for high-end stores to sell identical items at higher prices and still sell plenty of them.
These days you can do a much better job if you have data about your prospective customer. This is not a hypothetical. For example, Target was found to charge higher prices in their app if your location was close to one of their stores. Orbits and Delta have both been found to offer personalized prices as well.
Price fixing where everybody uses the same software is a real thing. RealPage recently settled a lawsuit over this.
You seem to be taking a very Libertarian approach where you assume economics 101 wins out over anything more complex, but if you look at what's actually going on in the world this is not the case.
> Dynamic personalized pricing is a real thing. Has been for ages.
The thing where you get a discount for making a below-average number of returns is also dynamic personalized pricing.
> Competition isn't nearly as perfect as you say. It's very common for high-end stores to sell identical items at higher prices and still sell plenty of them.
High-end stores are often selling more than just the product. Some people put a premium on buying from a place they trust not to carry low-quality products so they can save time needing to exclude those themselves, or to not provide them with a counterfeit or not make returns a hassle if there's something wrong with it when they get home. I mean how would you explain anyone buying from them otherwise?
> For example, Target was found to charge higher prices in their app if your location was close to one of their stores.
It's pretty obvious why they do this. It's more expensive to keep stock at a retail store with premium downtown real estate than a rural warehouse, but if you do then you'll get sales from customers who want to see the product before they buy it or who want to get it today instead of waiting for it to be shipped. So stores have to charge higher prices than websites to cover their higher costs.
Which creates a problem for a company that has both a store and a website. If they charge higher prices on their website than other websites, customers shopping at home will use another website. If they charge lower prices on their website, customers will come use the store as a showroom or take advantage of same-day store pickup but buy the product on their phone while in the store to get the website price, using the store without paying the higher costs of having a store. This is already putting many retail stores out of business because people will use the store as a showroom and then buy the same product on their phone from whatever website has the lowest price, but at least then the store has the advantage that you can walk out of there with the product instead of waiting for shipping.
Now, is raising the website price while you're in the store a good way to fix this? Maybe not, because it kind of pisses off the customers once someone figures it out and you get bad press. But that's the argument that they don't benefit from doing it, which is no reason to ban it. You don't have to punish companies for things the market will punish them for itself. Whereas if it's actually effective to help them keep the store open so that people continue to have a showroom and same-day pickup, why are we trying to stop this again?
> Price fixing where everybody uses the same software is a real thing. RealPage recently settled a lawsuit over this.
The fun thing about attempting to fix prices is that it's illegal regardless of whether it's effective. It's completely possible to net lose money by withholding units from the market to the net benefit of the landlords not using the same software, while simultaneously causing legal problems for yourself.
It turns out that "a fool and his money are soon parted" also applies to companies.
> You seem to be taking a very Libertarian approach where you assume economics 101 wins out over anything more complex, but if you look at what's actually going on in the world this is not the case.
The reason those things are taught in Econ 101 is that in the common case that's what happens. Competitive markets actually benefit customers.
The primary things you need from the government are a) to prohibit anti-competitive acts so that competition actually exists, b) to punish fraud and c) to price externalities imposed on people who aren't party to the transaction (e.g. environmental pollution).
You generally don't need (or want) the government to prohibit companies in a competitive market from doing things customers could avoid by just patronizing someone else. If many customers with 100+ options are knowingly choosing one you think they shouldn't, it's more often because they're getting something out of it than because the government is smarter and less corrupt than everyone else.
On the other hand, without private right to action, consumers may have no recourse if the AG doesn't wish to pursue action (possibly due to corruption, or lack of resources).
I like the idea, but I'm not sure how enforceable it will be in practice. It seems like it would be relatively difficult to prove a company is using surveillance pricing, and companies may just accept the risk of paying a fine.
It's actually not that hard to prove. For example, PSN now has dynamic pricing for their games which can vary quite wildly and all it takes is a small number of consumers with price differences to prove it. The same is true for grocery stores or whatever else.
Enforcing it is another question though and you're right that companies will likely just accept the fine. It's all the more reason why this sort of thing needs to aggressively be legislated against and denied.
If you can do traffic interception, there's a pretty good chance there's going to be traces of price levels in the API and the analytics. Especially since it's probably going to be bolted on to the side of anything PCI compliant. If there isn't, then it's probably going to be really easy to subpoena to prove mens rea, because getting that right is tricky and requires a fair amount of review and coordination.
There are dubious results published in every subject, including math and physics (whether theoretical or experimental). The difference is that such results are less likely to be widely cited and accepted by the field. For math and theoretical physics, the reader can (assuming sufficient knowledge and skill) verify the result themselves, so if your proof is incorrect or not rigorous enough, you won't get cited. For experimental physics, it is more common for different teams to reproduce a result, or verify a result using a different method, so papers aren't usually widely cited unless they have been independently verified. Part of that is cultural, part of that is attempting to reproduce results is relatively straightforward compared to say experiments involving human subjects, and part if is because results are usually quantitative, so "we did the same thing as paper X, but with more precision" is still interesting enough to be published.
How would you do that? One reason peer reviews are usually anonymous is to prevent retribution (ex. rejecting someone's paper, because they rejected yours). Not that it is perfect at doing that, but if you make it more transparent, you may trade one problem for another.
> their policies allow only authors to request corrections
Say what now?
So the only way to get a correction for a paper is if the author is willing to publicly admit they messed up? Something that an unethical researcher is very unlikely to do.
That may work for some businesses, but IME, the people who hold the purse strings generally aren't ok with just giving money to a project without getting something in return. Especially if it isn't a 501(c) non-profit they can get tax deductions for. I think it is actually a bit of a gap in tax law, because I don't think such a donation would count as a business expense either if you don't get something concrete in exchange.
reply