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The friction of playing the game is how price discrimination has always worked, whether clipping coupons or fiddling with apps. You either spend time to pay les

The friction of playing the game is how price discrimination has always worked, whether clipping coupons or fiddling with apps. You either spend time to pay less (and perhaps brag about it to make smalltalk just like this, which is like volunteer advertising) or you spend more to save time. It's weird, but it's actually an incredible way for the more well-off to subsidize the less well-off (at the risk of enticing some folks, who have the means but love a deal, to be penny-wise pound-foolish at everyone's expense including their own). At the end of the day, more people get fed at the price point they can deal with.

im3w1l 2y ago
> at the risk of enticing some folks, who have the means but love a deal, to be penny-wise pound-foolish at everyone's expense including their own If no one did this, wouldn't that just mean that the price discrepancy kept rising and rising?
- hunter2_ 2y ago
  That's an interesting point! For simplicity, let's divide into 3 segments: poor, middle, rich. Poor can only pay with coupons, rich can't be bothered/seen and only pay full price, middle can pay in full but some of them decide to use coupons because it's deemed worthwhile (so really 4 segments). Suppose middle doesn't exist, and prices are set in a way where tons of poor people are fed while also maximizing profit from rich people; perhaps this means giving the poor a 50% discount. Now introduce the middle. The portion of them paying with coupons is anywhere from 0% to 100%. The restaurant makes massive profits from them at 0%, and makes no profits from them (but covers all costs) at 100%. Let's say it starts near 0% because initially nobody knows about coupons and over time rises near 100% once the information has spread around. Profits decrease so something must be done to counter that. Shallower discounts (say, 25% off instead of 50% off) is a possibility, keeping the discrepancy tight, as you suggest. But increasing menu prices, while leaving the huge discrepancy, is also a possibility! Either method will get the profits to the desired level. But only one method -- maintaining the large discrepancy -- sustains the goal of maximizing the number of poor people fed. Therefore, a restaurant with that goal will choose that method; a restaurant without that goal simply won't issue coupons. The discrepancy, if one exists, is therefore constant regardless of how many penny-wise pound-foolish people are in the middle.

im3w1l 2y ago

> at the risk of enticing some folks, who have the means but love a deal, to be penny-wise pound-foolish at everyone's expense including their own If no one did this, wouldn't that just mean that the price discrepancy kept rising and rising?

hunter2_ 2y ago
That's an interesting point! For simplicity, let's divide into 3 segments: poor, middle, rich. Poor can only pay with coupons, rich can't be bothered/seen and only pay full price, middle can pay in full but some of them decide to use coupons because it's deemed worthwhile (so really 4 segments). Suppose middle doesn't exist, and prices are set in a way where tons of poor people are fed while also maximizing profit from rich people; perhaps this means giving the poor a 50% discount. Now introduce the middle. The portion of them paying with coupons is anywhere from 0% to 100%. The restaurant makes massive profits from them at 0%, and makes no profits from them (but covers all costs) at 100%. Let's say it starts near 0% because initially nobody knows about coupons and over time rises near 100% once the information has spread around. Profits decrease so something must be done to counter that. Shallower discounts (say, 25% off instead of 50% off) is a possibility, keeping the discrepancy tight, as you suggest. But increasing menu prices, while leaving the huge discrepancy, is also a possibility! Either method will get the profits to the desired level. But only one method -- maintaining the large discrepancy -- sustains the goal of maximizing the number of poor people fed. Therefore, a restaurant with that goal will choose that method; a restaurant without that goal simply won't issue coupons. The discrepancy, if one exists, is therefore constant regardless of how many penny-wise pound-foolish people are in the middle.