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No this is not irrational. When it comes to things like this they are only able to justify that price because information asymmetry. It's not irrational to not

by anfilt 4y ago

No this is not irrational. When it comes to things like this they are only able to justify that price because information asymmetry. It's not irrational to not want to get gouged or overpay. That extra money if it was not wasted because information asymmetry would provide value elsewhere in someones life or business dealings on other things. Like some companies have ridiculous things like MAP when comes to retailers selling their products. Just because a lot people are getting gouged and don't realize it does not mean they are not being gouged on price. Ideally other competition would help balance out this information asymmetry. In the ideal sense that a competitors costs to produce the same product/good would be roughly the same or in at least similar ball park that if one company is pricing something insanely high it would stand out. Although there hosts of reasons this does not work out in practice ranging from limited or no competition. Other issues such as that most goods are not identical ect...

fileyfood500 4y ago
I agree with your sentiment, and I am comforted by competition balancing things out. I think these price distortions are coming from companies with less competition (or they're just losing out on customers!) Most competitive software applications are offered for free (social media, web browsing, word processing) no matter how wealthy the users are, because nobody would pay more for an equivalent product. This is definitely a good argument for encouraging competition and increased price transparency.
Gigachad 4y ago
Price gouging has become a buzzword recently but it has a specific meaning. It's when a store increases the prices of essential items in the middle of a crisis. A store massively increasing the price of water during a natural disaster for example. Per country software pricing does not at all fit this definition. _Most_ products and services are priced differently in different countries. Food is cheaper, labor is cheaper, salaries are lower. Software being priced the same globally would just lock them out of buying it. For the end user, if you buy a $60 game and it provides good entertainment value compared to other forms of entertainment in your country, that was good value. Your entertainment wasn't devalued because someone in Africa bought it for $10 or someone else torrented it for free.
- anfilt 4y ago
  Your talking about price gouging in the strict legal sense. I suggest just read the first paragraph of wikipedia: https://en.wikipedia.org/wiki/Price_gouging https://en.wikipedia.org/wiki/Price_gouging Particularly these sentences: * "In precise legal usage, it is the name of a crime that applies in some jurisdictions of the United States during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market or to windfall profits." * "The term is not in widespread use in mainstream economic theory, but it is sometimes used to refer to practices of a coercive monopoly that raises prices above the market rate that would otherwise prevail in a competitive environment." The term gouging does not always refer to the criminal/civil (depends on jurisdiction) act of price gouging. There is a reason I said "gouged or overpay" and not just gouged because the term does have a few connotations and the overpay clarifies more of what I am getting at. As to your second point if the company is still making money in these countries with less purchasing power at lower prices why not just use that price then? Those people would not be locked out of purchasing it then. Also not everyone in a wealthy country is wealthy or has lots of extra money. High pricing in such countries also locks those people out. This argument is basically saying someone should just pay more because they are likely to have more money, and not pay the actually value of the product or goods. You are combining multiple things in this example such as utility, opportunity cost, economic value to person ect... The same item or product weather priced at $1 or $1,000,000 dollars on average is probably gonna to produce similar amount of utility from person to person. However, with this extreme of the example I made above there are going to be huge difference in particularly opportunity cost. The utility in your case the enjoyment derived from the game of course is going to be same regardless whatever else someone paid for the same game as well. Now companies generally often want to charge as much as they can for a good. Ideally, for every person a company sells their goods too they would charge economic value for that particular person instead of something like market value to maximize profit. Now in a competitive market a company is unlikely to be able charge whatever they want and still remain in business, but in less competitive markets this not necessarily the case. Even if people can afford the goods at these inflated prices in less competitive markets. Exact dollar amounts aside, higher prices are going to lead higher opportunity costs for people which is not a good thing. This is just side note you since mentioned value in your example. What is the true nature of value has been argued quite a bit throughout history. What value is partially depends on what one believes is the correct theory of value. I tend believe all items have some intrinsic value as well as a subjective value. Let's take an other example let us say iron and dirt both products of the Earth. I would say the iron would have a slightly higher intrinsic value than just dirt. This is because iron can do lots of things that can provide more numerous types of utility and that boils down to its material properties. Regardless what one feels or thinks of iron it's going to have the same material properties. However, this does not mean dirt has no value as well lets look at the subjective side of value. A farmer for instance is going to value good dirt probably more than welder that fabricates objects from iron and steel. So value between the two is subjective based off the individual. So the value of good dirt is likely to be higher for a farmer than that of a welder. However, this still does not mean dirt has no intrinsic value either based off it's properties. The properties of dirt can be used to grow things, and certain types of dirt such as clay can even be great building materials because it can be vitrified into bricks for example.

by anfilt 4y ago

fileyfood500 4y ago

I agree with your sentiment, and I am comforted by competition balancing things out. I think these price distortions are coming from companies with less competition (or they're just losing out on customers!) Most competitive software applications are offered for free (social media, web browsing, word processing) no matter how wealthy the users are, because nobody would pay more for an equivalent product. This is definitely a good argument for encouraging competition and increased price transparency.

Gigachad 4y ago

Price gouging has become a buzzword recently but it has a specific meaning. It's when a store increases the prices of essential items in the middle of a crisis. A store massively increasing the price of water during a natural disaster for example. Per country software pricing does not at all fit this definition. _Most_ products and services are priced differently in different countries. Food is cheaper, labor is cheaper, salaries are lower. Software being priced the same globally would just lock them out of buying it. For the end user, if you buy a $60 game and it provides good entertainment value compared to other forms of entertainment in your country, that was good value. Your entertainment wasn't devalued because someone in Africa bought it for $10 or someone else torrented it for free.

anfilt 4y ago
Your talking about price gouging in the strict legal sense. I suggest just read the first paragraph of wikipedia: https://en.wikipedia.org/wiki/Price_gouging https://en.wikipedia.org/wiki/Price_gouging Particularly these sentences: * "In precise legal usage, it is the name of a crime that applies in some jurisdictions of the United States during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market or to windfall profits." * "The term is not in widespread use in mainstream economic theory, but it is sometimes used to refer to practices of a coercive monopoly that raises prices above the market rate that would otherwise prevail in a competitive environment." The term gouging does not always refer to the criminal/civil (depends on jurisdiction) act of price gouging. There is a reason I said "gouged or overpay" and not just gouged because the term does have a few connotations and the overpay clarifies more of what I am getting at. As to your second point if the company is still making money in these countries with less purchasing power at lower prices why not just use that price then? Those people would not be locked out of purchasing it then. Also not everyone in a wealthy country is wealthy or has lots of extra money. High pricing in such countries also locks those people out. This argument is basically saying someone should just pay more because they are likely to have more money, and not pay the actually value of the product or goods. You are combining multiple things in this example such as utility, opportunity cost, economic value to person ect... The same item or product weather priced at $1 or $1,000,000 dollars on average is probably gonna to produce similar amount of utility from person to person. However, with this extreme of the example I made above there are going to be huge difference in particularly opportunity cost. The utility in your case the enjoyment derived from the game of course is going to be same regardless whatever else someone paid for the same game as well. Now companies generally often want to charge as much as they can for a good. Ideally, for every person a company sells their goods too they would charge economic value for that particular person instead of something like market value to maximize profit. Now in a competitive market a company is unlikely to be able charge whatever they want and still remain in business, but in less competitive markets this not necessarily the case. Even if people can afford the goods at these inflated prices in less competitive markets. Exact dollar amounts aside, higher prices are going to lead higher opportunity costs for people which is not a good thing. This is just side note you since mentioned value in your example. What is the true nature of value has been argued quite a bit throughout history. What value is partially depends on what one believes is the correct theory of value. I tend believe all items have some intrinsic value as well as a subjective value. Let's take an other example let us say iron and dirt both products of the Earth. I would say the iron would have a slightly higher intrinsic value than just dirt. This is because iron can do lots of things that can provide more numerous types of utility and that boils down to its material properties. Regardless what one feels or thinks of iron it's going to have the same material properties. However, this does not mean dirt has no value as well lets look at the subjective side of value. A farmer for instance is going to value good dirt probably more than welder that fabricates objects from iron and steel. So value between the two is subjective based off the individual. So the value of good dirt is likely to be higher for a farmer than that of a welder. However, this still does not mean dirt has no intrinsic value either based off it's properties. The properties of dirt can be used to grow things, and certain types of dirt such as clay can even be great building materials because it can be vitrified into bricks for example.