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Disclaimer: I think Tinder is a rent-extracting garbage app, BUT, philosophically speaking, why is dynamic pricing unfair? If the algorithm detects that based o

Disclaimer: I think Tinder is a rent-extracting garbage app, BUT, philosophically speaking, why is dynamic pricing unfair? If the algorithm detects that based on your biography, location and usage patterns, you would keep using this service even if it charged you 5x as much, isn't that just the market becoming more efficient?

car_analogy 5y ago
> market becoming more efficient You mean a company becoming more efficient at extracting money from their un-informed customers. A company finding new ways to leverage their market power, position, and information asymmetry.
- 8f2ab37a-ed6c 5y ago
  Why is that bad? That's how free markets work. Note, the post this is a reply to originally said "You mean a company becoming more efficient at extracting money from customers".
  - jraby3 5y ago
    Is it really a free market? Doesn’t the network effect create a monopoly?
    - iratewizard 5y ago
      Match group (which owns many of the major dating apps) definitely performs anti-competitive and borderline illegal behavior. But tinder is far from a monopoly. The fact that they own 22 dating app companies is testament to how easy it is to break into that market.
      - bradlys 5y ago
        It’s a testament as to how easy to break in. It is not a testament as to how easy it is to turn a profit. These companies get bought by match because they’re not super profitable and able to compete until end of time against match.
        8f2ab37a-ed6c 5y ago
        To be fair, it's hard to expect to make much of a profit when there are 22 companies out there already selling the same exact product. Online dating is pretty much dead as a direction for new startups to pursue, one big red ocean at this point, and there's no clever play left in it that would set a new players in the space apart. I don't see how consolidation into a couple of major players swallowing most of the companies in the space is avoidable. It's Booking Holdings vs Expedia Group all over again.
  - PuppyTailWags 5y ago
    Inquiry: My understanding is that free markets work in a setting with informed consumers who can make educated choices between competing services. Is my understanding incorrect?
    - barry-cotter 5y ago
      It can be proven that they work perfectly, i.e. cannot be improved on, under certain strong conditions. They work less than perfectly otherwise. But most markets are never near those conditions and empirically work quite well for the set of thick, widely traded markets with good[1] information. [1] Not perfect
  - robbedpeter 5y ago
    Products aren't priced based on value, but on the maximum a customer will pay. A free market identifies the value of a product through competition between different sellers of the product. Tinder is entitled to charge as much as they want to whoever they want as long as they're not discriminating against a protected class. The free market resolution requires competition, though. There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good? I don't think there's anything comparable to tinder that found be considered legitimate competition- match.com, Madison, adult friend finder, etc are operating in very different markets with very different tools and expectations.
    - kelseyfrog 5y ago
      > There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good? Price discrimination[1] relies on market power. This is a completely uncontroversial thing. Any discussion on price discrimination will tie back to market power. 1. Not a judgement here. This is a technical term from microeconomics.
- kelseyfrog 5y ago
  Enterprise B2B sales where contracted prices are never disclosed immediately springs to mind. It's the pinnacle of price discrimination.
hda2 5y ago
Because I'm being charged 5x for the exact same service. Want more money from your wealthy customers? Offer more in return.
- jacobobryant 5y ago
  Some services give discounts to students without removing any features. Is that bad, since all the other customers are getting the same service but have to pay more for it?
  - hda2 5y ago
    Nope. I don't have an issue with price discrimination if those being favored are given a price bellow the baseline that everyone else gets. That is not what's happening here. Tinder is charging certain people more than other for no reason other than who they are. If Tinder wants to overcharge certain demographics, they have to do it to the majority or offer something of equivalent value to them in return.
- 8f2ab37a-ed6c 5y ago
  To play the devil's advocate, could you not argue that this is more equitable? People of greater means pay more for the service, and keep the lights on for the less fortunate who still get to enjoy a well-funded product?
williamscales 5y ago
I don’t think dynamic pricing is per se unfair. But I do find it a bit misleading when it’s presented as static pricing, i.e. “The price for Tinder gold is X” as opposed to “The price we will charge you for Tinder gold is X”. Folks might make different decisions if they were aware.
trhway 5y ago
you seem to mistake market efficiency for abuse of an asymmetry. If anything, allowing abuse of an asymmetry leads to decrease in efficiency. They don't need better service if they can just extract more from you for the same service.
- 8f2ab37a-ed6c 5y ago
  The part I don't understand though is why this is a problem. If you think the price of the service is too high, move on to a competitor. I did once I saw how much they were going to charge me this year. Hinge/Bumble are a much better ROI at this moment, and Tinder lost a long time paying customer. That's the market at work.
  - car_analogy 5y ago
    > If you think the price of the service is too high, move on to a competitor. It's a problem because it puts consumers at an even further disadvantage in a game that's already stacked against them. That you're still willing to pay makes no difference - you're still worse off than before. Maybe it would be somewhat fair if consumers had their own well-funded departments, studying corporations to determine the lowest price they'd still be willing to sell a product for, and then collectively negotiating the price. But we don't, and it would be a waste of humanity's limited time to play these zero-sum, when we can just make the behavior illegal.
    - 8f2ab37a-ed6c 5y ago
      But, that's not what I'm saying. I'm in fact not willing to pay, and I'm moving on to a competitor that provides the same service for less.
      - car_analogy 5y ago
        I mean if, hypothetically, they had raised their price to the maximum you were willing to pay, and hadn't gone too high.
  - 5y ago
bruce511 5y ago
"fairness" is an interesting concept in commerce of any kind, which seems to be more prevalent in the US than elsewhere.[1] If one thinks of commerce as "willing buyer,willing seller" then a transaction occurs at the point where both sides are content with the money/product swap. What other people paid for the same product is only tangentially relevant - if I'm happy with the transaction today why should I be less happy tomorrow based on someone else's transaction? Outside the US you see this in places where markets are more fluid, and in some places have no pricing at all. You are expected to haggle (I mean, negotiate) - failure to do so makes a fool of the vendor to offer first too low a price. In other words, the world is unfair. Sometimes in your favour, sometimes against. The sooner one accepts that the easier life becomes.. Equally though unfairness creates a gap in the market. Girls toys cost more than boys toys (same toy, different package) suggests an opportunity. [1] for the purposes of this discussion I'm not talking about protected classes, such as race. There are some unfairness that are considered to be unacceptable.
- chii 5y ago
  > if I'm happy with the transaction today why should I be less happy tomorrow based on someone else's transaction? jealousy. Even animal studies have shown that monkeys who sees another monkey receive more reward for the same "work" gets angry (i recall it was some experiment where one monkey got "paid" in grapes, while another was paid in something else less desirable - i forgot what - and initially both were happy, as they did not see each other's payment, but once the monkey saw the grape reward, they refused their reward and got angry).
  - strken 5y ago
    This is a useful strategy. If the other monkey is getting paid in grapes and you're getting feed pellets, why shouldn't you make a play for an equally good reward? Obviously there are cases where you'll never get the grapes, but that's why we have executive function.
masswerk 5y ago
It may not be unfair, but is certainly undermining market dynamics. Normally, the price is fenced by multiple factors involving the entire spectrum of that particular market segment. With undisclosed personal pricing, prices aren't fenced anymore by known factors and the market isn't "well informed" anymore (if you believe in such things). We may think that being subjected to an essentially uninformed market may be deemed as unfair.
rdiddly 5y ago
An efficient market isn't necessarily the goal of human life, and a free market can be "bad." Nothing substantive to contribute to a detailed discussion otherwise, but keep this in mind.

car_analogy 5y ago

> market becoming more efficient You mean a company becoming more efficient at extracting money from their un-informed customers. A company finding new ways to leverage their market power, position, and information asymmetry.

8f2ab37a-ed6c 5y ago
Why is that bad? That's how free markets work. Note, the post this is a reply to originally said "You mean a company becoming more efficient at extracting money from customers".
- jraby3 5y ago
  Is it really a free market? Doesn’t the network effect create a monopoly?
  - iratewizard 5y ago
    Match group (which owns many of the major dating apps) definitely performs anti-competitive and borderline illegal behavior. But tinder is far from a monopoly. The fact that they own 22 dating app companies is testament to how easy it is to break into that market.
    - bradlys 5y ago
      It’s a testament as to how easy to break in. It is not a testament as to how easy it is to turn a profit. These companies get bought by match because they’re not super profitable and able to compete until end of time against match.
      - 8f2ab37a-ed6c 5y ago
        To be fair, it's hard to expect to make much of a profit when there are 22 companies out there already selling the same exact product. Online dating is pretty much dead as a direction for new startups to pursue, one big red ocean at this point, and there's no clever play left in it that would set a new players in the space apart. I don't see how consolidation into a couple of major players swallowing most of the companies in the space is avoidable. It's Booking Holdings vs Expedia Group all over again.
- PuppyTailWags 5y ago
  Inquiry: My understanding is that free markets work in a setting with informed consumers who can make educated choices between competing services. Is my understanding incorrect?
  - barry-cotter 5y ago
    It can be proven that they work perfectly, i.e. cannot be improved on, under certain strong conditions. They work less than perfectly otherwise. But most markets are never near those conditions and empirically work quite well for the set of thick, widely traded markets with good[1] information. [1] Not perfect
- robbedpeter 5y ago
  Products aren't priced based on value, but on the maximum a customer will pay. A free market identifies the value of a product through competition between different sellers of the product. Tinder is entitled to charge as much as they want to whoever they want as long as they're not discriminating against a protected class. The free market resolution requires competition, though. There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good? I don't think there's anything comparable to tinder that found be considered legitimate competition- match.com, Madison, adult friend finder, etc are operating in very different markets with very different tools and expectations.
  - kelseyfrog 5y ago
    > There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good? Price discrimination[1] relies on market power. This is a completely uncontroversial thing. Any discussion on price discrimination will tie back to market power. 1. Not a judgement here. This is a technical term from microeconomics.
kelseyfrog 5y ago
Enterprise B2B sales where contracted prices are never disclosed immediately springs to mind. It's the pinnacle of price discrimination.

hda2 5y ago

Because I'm being charged 5x for the exact same service. Want more money from your wealthy customers? Offer more in return.

jacobobryant 5y ago
Some services give discounts to students without removing any features. Is that bad, since all the other customers are getting the same service but have to pay more for it?
- hda2 5y ago
  Nope. I don't have an issue with price discrimination if those being favored are given a price bellow the baseline that everyone else gets. That is not what's happening here. Tinder is charging certain people more than other for no reason other than who they are. If Tinder wants to overcharge certain demographics, they have to do it to the majority or offer something of equivalent value to them in return.
8f2ab37a-ed6c 5y ago
To play the devil's advocate, could you not argue that this is more equitable? People of greater means pay more for the service, and keep the lights on for the less fortunate who still get to enjoy a well-funded product?

williamscales 5y ago

I don’t think dynamic pricing is per se unfair. But I do find it a bit misleading when it’s presented as static pricing, i.e. “The price for Tinder gold is X” as opposed to “The price we will charge you for Tinder gold is X”. Folks might make different decisions if they were aware.

trhway 5y ago

you seem to mistake market efficiency for abuse of an asymmetry. If anything, allowing abuse of an asymmetry leads to decrease in efficiency. They don't need better service if they can just extract more from you for the same service.

8f2ab37a-ed6c 5y ago
The part I don't understand though is why this is a problem. If you think the price of the service is too high, move on to a competitor. I did once I saw how much they were going to charge me this year. Hinge/Bumble are a much better ROI at this moment, and Tinder lost a long time paying customer. That's the market at work.
- car_analogy 5y ago
  > If you think the price of the service is too high, move on to a competitor. It's a problem because it puts consumers at an even further disadvantage in a game that's already stacked against them. That you're still willing to pay makes no difference - you're still worse off than before. Maybe it would be somewhat fair if consumers had their own well-funded departments, studying corporations to determine the lowest price they'd still be willing to sell a product for, and then collectively negotiating the price. But we don't, and it would be a waste of humanity's limited time to play these zero-sum, when we can just make the behavior illegal.
  - 8f2ab37a-ed6c 5y ago
    But, that's not what I'm saying. I'm in fact not willing to pay, and I'm moving on to a competitor that provides the same service for less.
    - car_analogy 5y ago
      I mean if, hypothetically, they had raised their price to the maximum you were willing to pay, and hadn't gone too high.
- 5y ago

bruce511 5y ago

"fairness" is an interesting concept in commerce of any kind, which seems to be more prevalent in the US than elsewhere.[1] If one thinks of commerce as "willing buyer,willing seller" then a transaction occurs at the point where both sides are content with the money/product swap. What other people paid for the same product is only tangentially relevant - if I'm happy with the transaction today why should I be less happy tomorrow based on someone else's transaction? Outside the US you see this in places where markets are more fluid, and in some places have no pricing at all. You are expected to haggle (I mean, negotiate) - failure to do so makes a fool of the vendor to offer first too low a price. In other words, the world is unfair. Sometimes in your favour, sometimes against. The sooner one accepts that the easier life becomes.. Equally though unfairness creates a gap in the market. Girls toys cost more than boys toys (same toy, different package) suggests an opportunity. [1] for the purposes of this discussion I'm not talking about protected classes, such as race. There are some unfairness that are considered to be unacceptable.

chii 5y ago
> if I'm happy with the transaction today why should I be less happy tomorrow based on someone else's transaction? jealousy. Even animal studies have shown that monkeys who sees another monkey receive more reward for the same "work" gets angry (i recall it was some experiment where one monkey got "paid" in grapes, while another was paid in something else less desirable - i forgot what - and initially both were happy, as they did not see each other's payment, but once the monkey saw the grape reward, they refused their reward and got angry).
- strken 5y ago
  This is a useful strategy. If the other monkey is getting paid in grapes and you're getting feed pellets, why shouldn't you make a play for an equally good reward? Obviously there are cases where you'll never get the grapes, but that's why we have executive function.

masswerk 5y ago

It may not be unfair, but is certainly undermining market dynamics. Normally, the price is fenced by multiple factors involving the entire spectrum of that particular market segment. With undisclosed personal pricing, prices aren't fenced anymore by known factors and the market isn't "well informed" anymore (if you believe in such things). We may think that being subjected to an essentially uninformed market may be deemed as unfair.

rdiddly 5y ago

An efficient market isn't necessarily the goal of human life, and a free market can be "bad." Nothing substantive to contribute to a detailed discussion otherwise, but keep this in mind.