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Comment by retsibsi

8 hours ago

I reckon that's empirically false. Shops set prices like $499.99 for a reason.

(And it has to be theoretically false, otherwise $X is equivalent to $X + $0.01 for all X, and so if you'd buy something at 1c you'd buy it for the contents of your bank account.)

If you still dispute this, you need to try to explain how a larger price difference can affect your decision. If you'd happily place a $1 bid, and you'd definitely not place a $100 bid, and a 1c difference could never deter you from placing a bid, then... well, how is that possible?

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retsibsi

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mort96  7 hours ago

Regarding the last part: it's simple, $1.01 is less than $100

This process doesn't work endlessly. You can't just add $.01 a billion times and I'd still pay it. But it works once or twice.

Shops set prices like $499.99 due to funny psychological effects: $499.99 is still a price "in the 400s" while $500 is "in the 500s". Nobody sits down and thinks logically about it and concludes that no, the $.01 difference between $499.99 and $500.00 crosses the line. But people see $499.99 and the brain initially goes "oh, it's only 400-something".

  • retsibsi  6 hours ago

    Are you:

    - agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't;

    - but maintaining that in a case where you have already decided to buy/bid and the price then rises by $0.01, you will always go ahead and pay the extra cent (provided this hasn't already happened a bunch of times)?

    If so, then I don't see the original problem. Do your best to estimate X (or, more specifically, the value of X you actually endorse as your 'true' valuation), and put that in as your maximum bid. If you get the item at $X you'll be marginally pleased; if you get it for less then you'll be more pleased; and if you miss out on it then you shouldn't mind, as you knew it was only going to be just barely worth it at $X.

    If you're actually disagreeing with the first point, then you still need to explain how that can make sense. It's coherent to say that in practice, after making the decision to buy at a given price, you would always accept a 1c price rise but at some point between the first 1c rise and the billionth you'd tell the guy to piss off. But that's not the same as saying the actual value of the item, separate from the emotions involved in the purchase process, is somehow indeterminate. If it's not worth it at $1, and it's worth it at $100, but 1c can never take it from "worth it" to "not worth it", then ?

    • mort96  6 hours ago

      > are you

      > - agreeing there must be some threshold such that if the price is $X then you will buy(/bid on) the item, but if the price is $X + $0.01 then you won't;

      No, I'm not. If I will buy an item for price $X, I will buy the item for the price $X + $.01. The decision to purchase something is more complex and cannot be encapsulated as one single dollar value.

      I think something your model fails to account for is: there is friction associated with a purchase. I will not necessarily go through the process of buying something whose "value" is $0.1 even if its price is $0.09, because there is friction to making a purchase which that $0.01 profit doesn't cover.

      As an example: I recently played a Pokemon ROM hack where there was an NPC selling a nugget for 4999. You can sell the nugget for 5000. That's 1 coin profit; objectively a good trade, right? But going through the process of purchasing something isn't free. So in spite of what your economic models may suggest, I did not stop everything I was doing and spend the rest of the game buying nuggets for 4999 and selling them for 5000, because that would've been boring and my time has value.

      If I've already gone through a lot of the process to decide to buy something at a certain price (which includes doing research to find out that the thing suits my needs, researching how the market looks for that category of thing, then bringing the item to the cashier or engaging in the eBay auction or contacting a seller), then I've already spent some not-insignificant amount of resources on the purchasing process. A $0.01 price increase will never be enough to stop me from completing that purchase, because $0.01 is not worth going through the whole process again.

      If I'm already at the point where I want to bid on an item at $X, then I have spent more than $0.01 in effort researching things to bid on, so I would also bid $X + $0.01.

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