Thread by @IanYorston, "Vickrey's basic idea was simple: when the trains were busy, charge more. [...]

Ian Yorston

IanYorston

"Vickrey's basic idea was simple: when the trains were busy, charge more. When they were quiet, charge less."

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection https://www.bbc.co.uk/news/business-49986191

Is surge pricing the fairest way to manage demand?

Ride-hailing app Uber is far from the first company to change prices according to customer numbers.

https://www.bbc.co.uk/news/business-49986191

William Vickrey postumously received the Nobel Prize having been awarded the #NobelPrize some three days before his death...

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection

https://en.wikipedia.org/wiki/William_Vickrey

Often the seller knows more than the buyer...

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection

https://en.wikipedia.org/wiki/Information_asymmetry

... which can lead people to make bad choices

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection

https://en.wikipedia.org/wiki/Adverse_selection

... perhaps deliberately

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection

https://en.wikipedia.org/wiki/Moral_hazard

... which can distort markets to deliver poor outcomes

#SurgePricing #MicroEconomics #Incentives #Nudge #InformationAsymmetry #MoralHazard #AdverseSelection

https://en.wikipedia.org/wiki/The_Market_for_Lemons

#SurgePricing no longer requires an army of pricing specialists. Companies can match supply and demand with real-time data and smart #Algorithms

But consumers can feel exploited by #DynamicPricing https://www.bbc.co.uk/news/business-49986191

Is surge pricing the fairest way to manage demand?

Ride-hailing app Uber is far from the first company to change prices according to customer numbers.

https://www.bbc.co.uk/news/business-49986191

You can follow @IanYorston.

Tip: mention @twtextapp on a Twitter thread with the keyword “unroll” to get a link to it.

Latest Threads Unrolled: