Friday, April 9, 2010

How much did you pay for lunch today? How would you like to name your own price for it?

Nice example of a business capturing "consumer surplus" in a creative way.  If a business can segment/segregate customers and charge them the highest price base on what they are willing and able to pay then they can effectively "price discriminate". Airlines are a prominent example of  price discrimination based on this principle.  In this case the restaurant is turning the tables and letting the customers do the work of segmenting themselves.  I wonder how effective this is? If nothing else, it is a nice promotion...(HT: Freakonomics Blog)
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