drink prices
Two things about drink prices come to my mind, at least one of which has been mentioned. 1. People go to bars for atmoshpere as well as booze, so perhaps price can vary without affecting the purchase decision too much. 2. Think of bars as falling into three classes: trendy, dive, and regular. Within each class, prices tend to be competitive. People understand this. In my own experience, I recall being quite concerned with drink prices soon after turning 21, but over time I (unconconsiously) used Baye's rule to determine that drink prices are pretty much the same within bar class. I no longer ask for prices at bars. It's not because I have more income, I don't, it's because I know that drink prices do not vary much, and that conclusion has largely held true--thus strengthening that 'belief.' The application of Baye's rule in #2 also explains the woman's outrage: the $13 price for a drink was probably completely out of whack with her experince. What it does make me wonder is why people can be so concerned about shopping around for the lowest gasoline prices. Perchance #1 comes into play here? Gas purchasers are purchasing gas only, without the atmosphere? __ Do You Yahoo!? Send FREE Valentine eCards with Yahoo! Greetings! http://greetings.yahoo.com
RE: drink prices
Prof. Bryan Caplan Writes: [...] > Joel Simon Grus wrote: > > > (1) Where else do people buy things without knowing the price first? > > (I've been thinking and have been unable to come up with any examples.) > > Hotel phone calls. Before single-price nationwide long distance became popular, people used to buy all long distance calls this way. In theory, you could call the operator for a rate quote, but most of the time people just placed their calls. Some anecdotal reports: I've visited a number of web stores where the shipping charges were added on after you authorized payment with a credit card. (Yes, I got burned on one of these.) I think people often tell their auto mechanic to just fix the problem without quoting a price. I usually tell mine to call me only if the price will exceed a few hundred dollars. (I don't have the time to price-shop for repairs to the car I use to get to work.) I can't ever remember my doctor and I discussing prices before he runs a test or does a procedure. On the other hand, my dentist always told me the cost of anything unusual, and sometime offered several approachs. Mark Draughn -- [EMAIL PROTECTED]
Re: drink prices
Actually, I've dealt with this situation and it's quite different than the drink at a bar. When you hire a (decent) carpenter, they will tell you what additional labor cost, should it be required. A reputable contractor will have this written out before hand, and you will have signed an agreement saying you know extra work might be reuqired @ $X per hour. Contracts are used to control uncertainty. However, when you order a drink/make a hotel call, there is often no menu, or its hidden. People seem to operate with a price range in mind that is acceptable to them. Fabio > There are also many situations where the price can change, and alter prior > price agreements. Suppose you hire a carpenter to fix a stairway. He quotes > you a price. But halfway thru the job, the carpenter discovers rotten pieces > that were not previously known, that have to be replaced, and the price > increases. You have already contracted and paid some of the expenses; most > folks will just go along with reasonable price changes. So often, in such > cases, we really don't know the final price. > > Fred Foldvary
Re: drink prices
> > (1) Where else do people buy things without knowing the price first? > Hotel phone calls. > Also, in restaurants people often order drinks before they see the menu. > Prof. Bryan Caplan There are also many situations where the price can change, and alter prior price agreements. Suppose you hire a carpenter to fix a stairway. He quotes you a price. But halfway thru the job, the carpenter discovers rotten pieces that were not previously known, that have to be replaced, and the price increases. You have already contracted and paid some of the expenses; most folks will just go along with reasonable price changes. So often, in such cases, we really don't know the final price. Fred Foldvary = [EMAIL PROTECTED] __ Do You Yahoo!? Great stuff seeking new owners in Yahoo! Auctions! http://auctions.yahoo.com
RE: drink prices
Why do people not reject decisions, which with hindsight are unfavourable? The "drink order paradox" seems to be similar to the subject of following paper: "Illusion of Expertise in Portfolio Decisions: An Experimental Approach" GERLINDE FELLNER, WERNER GUETH, BORIS MACIEJOVSKY ABSTRACT: Overall, 72 subjects invest their endowment in four risky assets. Each combination of assets yields the same expected return and variance of returns. Illusion of expertise prevails when one prefers nevertheless the self-selected portfolio. After being randomly assigned to groups of four, subjects are asked to elect their "expert" based on responses to a prior decision task. Using the random price mechanism reveals that 64% of the subjects prefer their own portfolio over the average group portfolio or the expert's portfolio. Illusion of expertise is shown to be stable individually, over alternatives, and for both eliciting methods, willingness to pay and to accept. Keywords: Investment Decisions, Portfolio Selection, Overconfidence, Unrealistic Optimism, Illusion of Control, Endowment Effect http://papers.ssrn.com/sol3/papers.cfm?abstract_id=296121 Steffen -Original Message- From: Bryan D Caplan [mailto:[EMAIL PROTECTED]] Sent: Monday, February 04, 2002 4:55 AM To: [EMAIL PROTECTED] Subject: Re: drink prices Joel Simon Grus wrote: > (1) Where else do people buy things without knowing the price first? > (I've been thinking and have been unable to come up with any examples.) Hotel phone calls. Also, in restaurants people often order drinks before they see the menu. -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "Who are they? Why are they running? Could they be coming to me? Really coming to me? And why? To kill me? *Me* whom everyone loves?" Leo Tolstoy, *War and Peace*
Re: drink prices
Joel Simon Grus wrote: > (1) Where else do people buy things without knowing the price first? > (I've been thinking and have been unable to come up with any examples.) Hotel phone calls. Also, in restaurants people often order drinks before they see the menu. -- Prof. Bryan Caplan Department of Economics George Mason University http://www.bcaplan.com [EMAIL PROTECTED] "Who are they? Why are they running? Could they be coming to me? Really coming to me? And why? To kill me? *Me* whom everyone loves?" Leo Tolstoy, *War and Peace*
Re: drink prices
It seems that there is little opportunity for price-ignorant purchases. At almost any store -- supermarket, hardware store, etc. -- the prices are out there to begin with. There seems to be significant incentive for the stores to do that, because sooner or later the consumer will find out the price, and, if they do not want the item at that time, can refuse to purchase it (requiring the store to re-shelf the item, have workers who are able to handle higher levels of customer interaction, etc). As for restaurants, well, in some places a burger is $0.99. In others, $6.99. From bar to bar, drink prices are roughly the same, I think. The only other place I've seen this is at a coffee bar, or, more precisely, when people order coffee. Last night, for example: I went out to dinner w/some friends, and, after eating, the waitress asked if we'd like anything else. One friend got a coffee. She didn't know how much it'd cost; there was no menu in front of her, and she hadn't checked the price when we ordered the food. But she knew, roughly, how much the drink costed. I'd assume the same is true at bars -- drinks aren't (usually) priced differently from place to place. My guess? People don't go to bars for the beer (or coffee, etc.). They go for the atmosphere, to meet people, whatever. Similarly, my friend didn't go to the restaurant for coffee -- she went for the food. Although I bet should would have been pissed to find her coffee costing $13. Dan Lewis [EMAIL PROTECTED] At 12:49 AM 2/3/02 -0600, you wrote: > >Last night I went to a bar, and the woman in front of me ordered a large, >fancy drink. It was poured, and the bartender said "$13.00," at which >point the woman objected. "Sorry," said the bartender, "once it's poured, >there's nothing I can do." > >Many bars seem to have no price lists, and people generally seem willing >to order without first asking how much the drinks cost. > >(1) Where else do people buy things without knowing the price first? >(I've been thinking and have been unable to come up with any examples.) > >(2) Why does this happen in bars? > >- Joel > >
Re: drink prices
People often make "impulse purchases" at the supermarket as they proceed through checkout without knowing the price. Indeed, the price is usually not even marked. I suspect, however, that the explanation is different from the one I'd employ to explain the phenomenon you describe. Impulse buys are quite inexpensive, almost by definition, and hence price sensitivity tends to be lower than it would be for a potenially expensive glass of alcohol. --Brian Auriti [EMAIL PROTECTED]
Re: drink prices
Are you sure this is what happened? I'd guess that the woman expected a range of price, and was shocked when when she found out the drink was $13. > (1) Where else do people buy things without knowing the price first? > (I've been thinking and have been unable to come up with any examples.) People are drunk and/or trying to have a good time. I think it's an example of people with very short time horizons caused by drunkeness or distracted by other events (televised sports, pool, flirting, music, etc) If you wanted a biological explanation, I'd guess bars are places where people's adrenaline goes up, they get excited and lose their patience. > (2) Why does this happen in bars? > > - Joel >
Re: drink prices
On Sunday, February 03, 2002 1:49 AM Joel Simon Grus [EMAIL PROTECTED] wrote: > Last night I went to a bar, and the woman in front of me ordered a large, > fancy drink. It was poured, and the bartender said "$13.00," at which > point the woman objected. "Sorry," said the bartender, "once it's poured, > there's nothing I can do." Why didn't she just walk? I'm sure the establishment wasn't going to a) beat it out of her or b) press charges on her. > Many bars seem to have no price lists, and people generally seem willing > to order without first asking how much the drinks cost. > > (1) Where else do people buy things without knowing the price first? > (I've been thinking and have been unable to come up with any examples.) Some restaurants where some or all prices are listed. Usually, though, there's an expectation of a certain price level. > (2) Why does this happen in bars? I'm not sure, but my guess is since people are likely to be having a good time and not want to be a party pooper or to be inebriated and therefore have impaired judgment, most are less likely to complain. Cheers! Daniel Ust http://uweb.superlink.net/neptune/
Re: drink prices
We experiment something similar in Europe to day with euro : we don't know the prices in euro of what we buy. The conversion is often difficult (an eurp = 6,59 French francs). We usually don't really figure what we shall get as a salary (we were told but who remembers?). It's a very strange experience. Almots every one is happy with it. It's like a game with money. Joel Simon Grus a *crit : > > Last night I went to a bar, and the woman in front of me ordered a large, > fancy drink. It was poured, and the bartender said "$13.00," at which > point the woman objected. "Sorry," said the bartender, "once it's poured, > there's nothing I can do." > > Many bars seem to have no price lists, and people generally seem willing > to order without first asking how much the drinks cost. > > (1) Where else do people buy things without knowing the price first? > (I've been thinking and have been unable to come up with any examples.) > > (2) Why does this happen in bars? > > - Joel
drink prices
Last night I went to a bar, and the woman in front of me ordered a large, fancy drink. It was poured, and the bartender said "$13.00," at which point the woman objected. "Sorry," said the bartender, "once it's poured, there's nothing I can do." Many bars seem to have no price lists, and people generally seem willing to order without first asking how much the drinks cost. (1) Where else do people buy things without knowing the price first? (I've been thinking and have been unable to come up with any examples.) (2) Why does this happen in bars? - Joel
