Thursday, November 11, 2004

Two weird pricing stories 

...that I heard this morning.
  1. A local grill and bar sells hamburgers with chips for $4.50. A friend goes in orders one and asks for mayo on the side. He is charged an extra $.75. He does not return to the bar. "If they had raised the price of the burger $.50 and gave the condiments for free, I would still go there," he says. Is this somehow effective price discrimination? Or is the bar owner just dumb, or cheap, or ...?
  2. A colleague tells me he went to the local martini bar -- relatively new, trying to be upscale, priced to keep college students away. This colleague orders scotch on the rocks. He notices two charges on his slip -- one for the scotch, the other for the ice ($1). He learns that if he had the scotch 'neat' he would not have paid the extra dollar. What explains this?
I know our lunch hour today will be consumed thinking about this, because this is what economists do. I love my job.