According to Freakonomics, entering the Mandalay club beach in Vegas costs $50 for men, but only $10 for women.

Explanation #1 (the Freakonomics one): This is simple demand-based price discrimination. Both genders feel more comfortable when the customers are 50/50, and because there’s less demand from women, the establishment has to cut prices for them.

Explanation #2: Women come for the beach, men come for the beach AND the women. And they’re ready to pay an extra $40 for the latter.

Explanation #3: Women and Men are both ready to pay $50 for enjoying the beach, but Women get a discount of $40 because of the annoyance of men.

Now, what would be interesting is to index this price difference with the amount of clothes worn…

About the latest definition (a Stackelberg game is a game/competition where the player in leading position is also the first mover)…

One may consider it’s the ‘natural’ order of things, but think twice: most of the time, when someone is in a leading position, it’s his best interest to keep the status quo.

It means the best choice… is to follow the strategy of the player behind, rather than taking risks.

And indeed, that happens in sailboats racing (yes, it’s called a regatta!).
Once a boat is leading, she often mimics the moves of the boat behind, so the distance between the two always remain the same until the finish line.

At last, it gives big corporations a strong justification NOT to innovate!

Publicly traded company Gamestop (NYSE: GME) announced its results this month, and boy, that’s almost indecent… More than 20% growth over last year.

Their Used video games business is on the verge of growing over $2 billion per year… Considering an average price of $20, that’s 275,000 games sold every day

Humongous
Adjective, Informal. Synonyms are ‘Huge’, ‘Enormous’.
Example: 2008 Bailout

The figures are slightly misleading (for instance, Iraq War is considered way more expensive, GDP was smaller before, therefore a dollar spent was hurting more back then, etc…) but it’s frightening nonetheless.

Love the Redesigning America 2.0 of the Aviary Blog

With such currency, no doubt consumers will be less concerned about spending their money, so that would definitely revitalize economy.

by the way, what about a ‘Monopoly Bailout plan’?

1) The Government will help near-bankruptcy corporations C1, by giving them real money, taken away from people P.

2) In exchange, those people P would receive truckloads of Monopoly money, that they could use to buy stuff from other, soon-to-be-bankrupt-as-well, corporations C2.

3) Then these corporations C2 would in turn change that Monopoly money back into real money (Chinese Yuan, preferably), that would be paid back by the very same people P or their descendants P’.

What do you mean, it’s been implemented, already ???

Thanks, Dogbert, hopefully now I get it…

(and thanks to the Big Picture)

“We must be able to survive the difficulties. We need to go for dynamic pricing in response to the changing operating and business environments”

Datuk Seri Idris Jala, CEO of Malaysian Airlines, October, 20th, 2008

As shown is the airline, hotels or car rental industry, there is just too much money to be made from Dynamic Pricing for businesses to ignore it.
You may think it’s valuable in those industries because they all have a ‘no value’ inventory. After all, an empty seat when the plane has taken off is worth the same than a decommissioned Russian nuclear submarine: nothing but embarrassment.
But whatever the consumer product, there will always be a point in time when its value will become $0, nada, nothing. As it’s better to sell it as far away as possible from that unfortunate event, Retails do ‘Sales’; services do ‘promotions’.

Pricing dynamically will become feasible, because the cost of changing price is going down…. LCD price tags with over-the-air update begin to proliferate; they’ll make price changes instantaneous and virtually free!

Second, I think psychologically, consumers would rather like true fixed prices, but cannot afford it, because it means way too inefficient markets. Slowly, the ever-changing price of Gas, the ‘Peak pricing’ of road tolls and utility make people more confortable with the value being determined in realtime.
Not to be omitted, the success of eBay and other classifieds has indirectly popularized Dynamic Pricing. As phpauctions puts it: “While not yet fully realized, online auctions have the potential to revolutionize pricing by replacing sticker (or fixed) prices, with a dynamic pricing model whereby merchandise is priced according to what the market will bear”

Not surprisingly, if you incentive workers, they become more productive. See this article in Slate about a British farm experiments where field workers’ pay changed based on the amount of fruit they picked.

The sad result is, as author Tim Harford puts, that “workers prioritized money over social ties, abandoning groups of friends to ally themselves with the most productive co-workers who would accept them”. Ah, people…

Maybe in the near future, we’ll be able to determine how much it costs to hang up with loosers?

My guess: a lot, but 1) it’s entertaining nonetheless, 2) who would want to hang up with us otherwise ?

If several people are not paying the same price for approximately the same product or service, then the highest paying customers are sponsoring the cheapest ones, right? The Business traveller is paying proportionally more of the plane cost than the Economy fares, so in a way is paying a part of their tickets. So, the Business traveller is paying unfairly too much…?

Wrong.

As odd as it seems, the highest paying customers are paying LESS thanks to the cheap customers!

The reason is the following: it’s easy to move the cheap customers from one slot to another, because they are very price-sensitive. This allow to optimize the capacity usage of the plane, hotel, whatever.

Example: let be a plane of 200 seats, which costs $50,000 to fly, and is filled up by 50 Business travellers only on average. Than means those travellers have to pay $1,000 a seat for the airline to break even. Now, let’s say the airline sells 150 cheap seats at $200 each, then the 50 business travellers would only have to pay ($50,000 - $30,000) / 50 = $400 for break even!