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low prices are a certain optimization. Others can optimize for experiences. I personally haven't used AirBNB because I don't like the risks associated with the

low prices are a certain optimization. Others can optimize for experiences. I personally haven't used AirBNB because I don't like the risks associated with the use of their product. Some people love it.

theptip 5y ago
The free market at its best. You can choose the cheap-but-cuts-corners option, or pay more to get more. Of course, this implicitly depends on informed consumers, so it’s a bit troubling that Airbnb is leaning so heavily on NDA-based settlements. I don’t have a feel for how common that strategy is in competitors, say hotel / VRBO.
- ghaff 5y ago
  People will definitely pick hotel/hotel chain based on price vs. quality. In the case of AirBnb, while you certainly have some people looking to pick a particular kind of property/experience vs. a hotel, my sense is that most people are going with AirBnB vs. hotel to save money.
- LeifCarrotson 5y ago
  The problem is that the cheap option kills off the pay more to get more option. Informed consumers, especially those who have perfect knowledge of the effects of their actions on future and who can optimize for cooperate-cooperate in a prisoner's dilemma, are largely a myth. The general store only works because a significant number of people were buying their weekly groceries at the high-quality price, it withers away when the only consumer surplus left in the market is at the tippy top of the demand curve. Even if they were viable in the long term, it would be easy for competitors to temporarily undercut them and put them out of business. It's easy to observe that small-town general stores disappear when WalMart and Dollar General arrive. It may be even harder for these niche businesses to survive on the Internet, where instead of clinging to existence through the local customers who don't want to drive to the big city Walmart, the more local source for Internet customers is the first ad from the Amazon conglomerate they already have an account with. That's a lot easier than drilling down through the search results to the specialty site (that you've vetted as an actually more valuable option, not a scam forwarding cheap junk) and creating an account there. Rational, informed consumers do not exist, human beings do. Capitalism does not create an infinite spectrum of a free market where all needs are met, there are winner-takes-all effects that distort the result. I don't claim to know of a better system, and I don't have the power to change the current system, but I can imagine some changes to resolve various injustices that the system's current incentive structure will never arrive at.

theptip 5y ago

The free market at its best. You can choose the cheap-but-cuts-corners option, or pay more to get more. Of course, this implicitly depends on informed consumers, so it’s a bit troubling that Airbnb is leaning so heavily on NDA-based settlements. I don’t have a feel for how common that strategy is in competitors, say hotel / VRBO.

ghaff 5y ago
People will definitely pick hotel/hotel chain based on price vs. quality. In the case of AirBnb, while you certainly have some people looking to pick a particular kind of property/experience vs. a hotel, my sense is that most people are going with AirBnB vs. hotel to save money.
LeifCarrotson 5y ago
The problem is that the cheap option kills off the pay more to get more option. Informed consumers, especially those who have perfect knowledge of the effects of their actions on future and who can optimize for cooperate-cooperate in a prisoner's dilemma, are largely a myth. The general store only works because a significant number of people were buying their weekly groceries at the high-quality price, it withers away when the only consumer surplus left in the market is at the tippy top of the demand curve. Even if they were viable in the long term, it would be easy for competitors to temporarily undercut them and put them out of business. It's easy to observe that small-town general stores disappear when WalMart and Dollar General arrive. It may be even harder for these niche businesses to survive on the Internet, where instead of clinging to existence through the local customers who don't want to drive to the big city Walmart, the more local source for Internet customers is the first ad from the Amazon conglomerate they already have an account with. That's a lot easier than drilling down through the search results to the specialty site (that you've vetted as an actually more valuable option, not a scam forwarding cheap junk) and creating an account there. Rational, informed consumers do not exist, human beings do. Capitalism does not create an infinite spectrum of a free market where all needs are met, there are winner-takes-all effects that distort the result. I don't claim to know of a better system, and I don't have the power to change the current system, but I can imagine some changes to resolve various injustices that the system's current incentive structure will never arrive at.