Thaler employed a typical behavioural economics strawman. He compares surge pricing not with trying to find a cab at the same set of conditions but with lower demand periods. Thaler does not mention how difficult it is get a cab because of entry barriers and fixed supply.
I well remember trying to get a cab across Washington DC once with no success. Was not that confident about getting a cab to the airport for my flight back to New Zealand
When Bruce Springsteen decided to do a run of shows at a Broadway theater with fewer than a thousand seats, he appeared to reject the laws of economics — or at least what would seem to be in his financial best interest.
He limited ticket prices to between $75 and $850 and has been allocating them through a lottery that includes identity verification. His goal was to prevent scalping. Yet not everyone who sought tickets got them at those prices. The tickets that have leaked onto the open market on StubHub ranged in one recent search from $1,200 to $9,999.
It sure looks as if Mr. Springsteen left a great deal of money on the table …. After all, some people got tickets for $75 for which others were willing to pay four figures.
That is from Neil Irwin, “Why Surge Prices Make Us So Mad: What Springsteen, Home Depot…
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