There are Free Lunches Statement of Intentions

There are Free Lunches: Behavioral Clues to Live Happy in the Economic World is a blog that intends to present updated and relevant information about the "hidden" and only recently uncovered dimensions of the economic science: the behavioral factors. With this blog we intend to promote in Europe and in the rest of the World, the top research articles and perspectives on behavioral economics, decision making, consumer behavior, and general behavioral science. We aim to be followed by journalists, academics, managers, civil servants, and everyone who wishes to improve their daily interaction with the economic world and consequently, their lives' happiness.

Wednesday, 28 September 2011

The Price of Friendship, as Measured by Radiohead Tickets (via Freakonomics)

Radiohead is famous for doing price experiments with fans. At the height of illegal downloads, the band asked fans to pay-what-you-want for their album. They picked a small venue in New York — the Roseland Ballroom which accommodates 3,000 instead of Madison Square Garden which seats about 20,000 — and limited ticket sales to 2 per customer. But can limiting supply like this really stop a black market from emerging?

The answer is no. I checked Craigslist and there were already tons of ads. Economics tells us that limiting supply will only make price go up. I’m seeing average scalping prices right now — from $400 to $1000 for an $80 face value ticket. But what’s more interesting to me are the desperate buyers, not the sellers. Sellers just list the price they’d like for their goods, but buyers — many of whom don’t have that kind of cash — will start to barter in hopes that a seller is crazy enough not to take cash. This kind of thing is always fun for an informal study on people’s utility curve. The Gothamist has a good roundup of weird things people are offering/asking for (a soul, a date, or “priceless heirlooms or foreign treasures.”)

And of course, for a friend who’s so kind to offer me a ticket (not free, but at cost) I did the only thing I could think of: map his utility curve.

There were 2 conditions to his offer: arrive on time, and 100% commitment to going. Both of which were fine by me. I surveyed him to try to understand why he would give up $1000.

If you have 5 minutes, you can check everything here:

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