Not So Dismal After All

John List and Uri Gneezy have appeared on our blog many times. This guest post is the last in a series adapted from their new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. List appeared in our recent podcast "How to Raise Money Without Killing a Kitten."

Pay-what-you-want is a bit of an oxymoron for economists. After all, if you had the choice of how much to pay, wouldn’t you always pick $0? But as we’ve found time and again, people are a lot more complicated than typical economists have assumed.

Case-in-point: in 2007 Radiohead made their album In Rainbows downloadable online for whatever price customers wanted to pay. Precise statistics are hard to come by, but one thing is clear: a lot of people paid a good amount of cash for the album. In fact, it was so successful that other acts have followed suit. Heck, even corporations like Panera have gotten into the act, setting up cafes in St. Louis and Chicago where customers pay what they can for certain menu items. 

What got us curious, though, was trying to answer why people were paying more than $0. In particular we wanted to know what sorts of levers could we pull that would induce people to pay more or pay less in an economic environment like Radiohead’s website? Luckily, right around this time we started working with Disney Research, and they were just as interested in these questions.

Disney's Stealthy "Seal Team Six" Trademark Move

On May 1st, Seal Team Six killed Osama bin Laden. On May 3rd, the Walt Disney Company—usually known for animated films about princesses and singing bears--applied for a trademark on the term “Seal Team Six.”

The standard economic rationale for trademark law is that trademarks reduce search costs for consumers. Think about a trip to buy new running sneakers. There may be dozens of pairs on the shelves of your local store. And many hundreds more online. How do you choose?

How Disney Does It

My son visited the Walt Disney World complex in Florida and pointed out the methods used to spread demand temporally. Coupons for 30 percent discounts on restaurant food purchased before noon or between 3PM and 4:30PM are available. Merchandise coupons for 20 percent discounts are given for use between 9AM and noon. Both coupons are offered to shift demand rightward at non-peak times.

Indexed, Freakonomics Edition

I am a fan of the blog Indexed, on which a young Ohio copywriter named Jessica Hagy creates sweet and simple graphical pictures, on index cards, that tell a story. The blog allows her, she writes, to “make fun of some things and sense of others. I use it to think a little more relationally […]