Logical Limits To Sharing Economy?

[Bogdanov Vishniac]

Gonna stop you right there: eating in somebody's kitchen posing as a "restaurant" that hasn't been inspected by the health department is not beneficial to society.

In case you missed it... people already eat in other people's homes. Why, when money comes into the picture... does it suddenly become so necessary to also bring the health department into the picture?

Epidemiology. If you improperly cook chicken at a dinner party there's a clear chain of causality and a limited pool of people affected - only the people you invited get sick. If you have a restaurant however, you could serve hundreds of people in one day with no easy way of keeping track of who ate what when, so if people get sick it's hard to tell when and where they got sick. Hence why restaurants and other food service places are held to a higher standard than home cooks.

[Liberaxia]

Gonna stop you right there: eating in somebody's kitchen posing as a "restaurant" that hasn't been inspected by the health department is not beneficial to society.

In case you missed it... people already eat in other people's homes. Why, when money comes into the picture... does it suddenly become so necessary to also bring the health department into the picture?

You can't possibly be this stupid.

[Liberaxia]

The sharing economy is largely just an excuse to go around the hard-fought for workers' rights and consumer regulations we've fought for for over a hundred years.

How so?

[Scarlet Tides]

The sharing economy is largely just an excuse to go around the hard-fought for workers' rights and consumer regulations we've fought for for over a hundred years.

How so?

A hotel has to provide a minimum of things, have inspections, etc.

People can flat out lie, have bullshit reviews and edit their airbnb to look great. Someone can find themselves in an infested rathole with no proper fire escape as a result.

There's even been talk of AirBnB actually scrubbing bad reviews because it means less money for them.

[Arkolon]

The sharing economy is largely just an excuse to go around the hard-fought for workers' rights and consumer regulations we've fought for for over a hundred years.

How so?

Uber et al. are challenging the job security of licensed taxi drivers in Western Europe, as is airbnb challenging the job security of licensed hotels, etc. Since it's expensive and there are several hoops to jump through to be licensed and have this praised job security, social democrats stuck in a XX^e century mentality see the sharing economy as a threat to workers' rights.

[Liberaxia]

How so?

Uber et al. are challenging the job security of licensed taxi drivers in Western Europe, as is airbnb challenging the job security of licensed hotels, etc. Since it's expensive and there are several hoops to jump through to be licensed and have this praised job security, social democrats stuck in a XX^e century mentality see the sharing economy as a threat to workers' rights.

I have a feeling it's more complicated than that. I'm not a fan of buzz words and "sharing economy" strikes me as just that; I tend to pass over them in text that I read. Only position I have is to enforce anti-gouging laws on surge pricing.

[Arkolon]

Uber et al. are challenging the job security of licensed taxi drivers in Western Europe, as is airbnb challenging the job security of licensed hotels, etc. Since it's expensive and there are several hoops to jump through to be licensed and have this praised job security, social democrats stuck in a XX^e century mentality see the sharing economy as a threat to workers' rights.

I have a feeling it's more complicated than that. I'm not a fan of buzz words and "sharing economy" strikes me as just that; I tend to pass over them in text that I read. Only position I have is to enforce anti-gouging laws on surge pricing.

In any case, that is the reason French cabbies have been protesting Uber.

[Liberaxia]

I have a feeling it's more complicated than that. I'm not a fan of buzz words and "sharing economy" strikes me as just that; I tend to pass over them in text that I read. Only position I have is to enforce anti-gouging laws on surge pricing.

In any case, that is the reason French cabbies have been protesting Uber.

It's understandable, I guess.

[Atlanticatia]

How so?

Uber et al. are challenging the job security of licensed taxi drivers in Western Europe, as is airbnb challenging the job security of licensed hotels, etc. Since it's expensive and there are several hoops to jump through to be licensed and have this praised job security, social democrats stuck in a XX^e century mentality see the sharing economy as a threat to workers' rights.

I'm not opposed to Uber per se. What I am saying is that we need to ensure technological change doesn't threaten hard-fought for workers' and consumers' rights -- not that we should prevent technological change.

Uber can exist as a ride-hailing app. But there is no reason why Uber can't treat their drivers as actual employees: paying their social taxes, filing their taxes for them, ensuring that they are protected under anti-discrimination statutes, ensuring that they have the right to form a union and collectively bargain, etc. Unions are important: in my city, Uber arbitrarily cut fares by 20%, reducing driver income by 20% overnight. Drivers couldn't do anything about it, and drivers were very angry. Worker exploitation doesn't disappear just because it's in the sharing economy.

And there is no reason why Uber can't adhere to regulations that taxi companies have to. In my city, Uber was exempt from having to have cameras in their cars and was exempt from having certain driver license testing. These things are incredibly vital for safety reasons.

I just don't see a reason why we should give up important regulations just so Uber can make some more profit. Don't throw technology out the window, but we must ensure that fundamental rights and protections aren't ignored. That's where my objections come from, rather than trying to prevent technology from changing or protecting monopolies.

[Arkolon]

Yeah, Liberaxia, see what I mean?

[The Nihilistic view]

Listed price gives buyers and sellers security. There is a reason why it is the majority method of consumers buying goods, has been for ages and will continue to be.

The market has already decided it is the best aproach in this area, the stupid idea is trying to claim otherwise.

[Maqo]

The article you linked says that these things have already tried to exist, but failed. But it listed the main problem as not enough people willing to pay the cook's asking price (their 'WTA') even when it was made public ahead of time. Its not a problem with 'one price fits all'. People weren't willing to pay $50 when they knew the seller's WTA answer would be $50, so there would be even less response when you have no idea what the price is going to be.

So aside from all the issues laws surrounding food service, it seems that the answer to 'why' is that there just isn't sufficient overlap between the 'WTP' of potential diners and 'WTA' of potential cooks to justify anyone bothering with this kind of service. Its too expensive to be worth people's time, because there are a multitude of cheaper, faster, and more reliable options available from all kinds of restaurants/fast food/etc. Demand is already clear - there just isn't enough.

Restaurants can work because they can buy food in bulk at cheaper prices and they can be reasonably sure how much will get used in what time frame. Someone can arrive and order and food can be ready in 15 minutes because chefs are already cooking for customers before they arrive. If you try to do that with a home restaurant that can only possibly hope to sit 2 couples on a good night, you're going to lose a lot of money every night that people don't show up. If you don't start cooking before people arrive, then you can't compete with restaurants on speed or quality of service.

This service doesn't exist because there are better services available. There aren't enough people whose WTP is greater than the cooks' WTA.

[Xerographica]

Demand is already clear - there just isn't enough.

So my neighbor from El Salvador, who makes incredibly delicious soups, knows how much that I'd be willing to pay for her soups? Because... she's a mind-reader? Because... my WTP for her soups will always be exactly the same?

So Royksopp, who makes incredibly delicious songs, knows how much that I'd be willing to pay for their songs? Because... they are mind-readers? Because... my WTP for their songs will always be exactly the same?

So you, who make an occasionally decent post, know how much that I'd be willing to pay for your posts? Because... you're a mind-reader? Because my WTP for your posts will always be exactly the same?

Demand being clear is the exception rather than the rule.

Imagine a world in which demand was perfectly opaque. Would you want to live in this world? Of course not. It would be hell.

Is our current world hell? The degree to which it is not hell reflects the degree to which demand is clear. To what degree is demand clear? Again, demand being clear is the exception rather than the rule. Therefore, our world is a lot closer to hell than heaven.

[The Two Jerseys]

Demand is already clear - there just isn't enough.

So my neighbor from El Salvador, who makes incredibly delicious soups, knows how much that I'd be willing to pay for her soups? Because... she's a mind-reader? Because... my WTP for her soups will always be exactly the same?

So Royksopp, who makes incredibly delicious songs, knows how much that I'd be willing to pay for their songs? Because... they are mind-readers? Because... my WTP for their songs will always be exactly the same?

So you, who make an occasionally decent post, know how much that I'd be willing to pay for your posts? Because... you're a mind-reader? Because my WTP for your posts will always be exactly the same?

Demand being clear is the exception rather than the rule.

Imagine a world in which demand was perfectly opaque. Would you want to live in this world? Of course not. It would be hell.

Is our current world hell? The degree to which it is not hell reflects the degree to which demand is clear. To what degree is demand clear? Again, demand being clear is the exception rather than the rule. Therefore, our world is a lot closer to hell than heaven.

So you ignore the rest of the post and cherrypick the one sentence that has already been explained by said post...

From the article you cited:

And it's hard to tell whether the companies that are left are doing well. Even in big cities, there aren't always a lot of meals for customers to choose from. If a would-be diner finds an EWSA they want to try for, say, tonight or tomorrow, they may not be willing to plan three or four or five nights ahead (or travel for 40 minutes) just to test out a new product. For diners and chefs, posting these events on Eventbrite or similar could work just as well as turning to a EWSA. But for companies hoping to make Airbnb-sized profits, that involves a lot of facilitation for a small cut and less overall control.

On a Thursday in the last week of March, the app EatWith had five different dinners available for the upcoming weekend. Despite a unanimous four and a half or five star rating for each host, each of them had at least five seats left. These are for dinner parties that range in size from five to 12. In all likelihood, many of these will end up cancelled at the last minute.

While Feastly often has meals available only a day or two away, (and some that are "waitlist only"), the majority of them are based in San Francisco. On a recent Monday, Chicago had no scheduled meals listed, New York had one, DC had two, LA had four, and the rest for all these cities were "available by request" — meaning, essentially, if you already have a group of friends who want to eat together, the chef will cook this meal for you.

So despite how well these dinners are rated, they still have empty seats, and will likely be cancelled due to lack of demand.

Obviously, people aren't interested in paying whatever price the cook is asking for the dinner if there are empty seats in the first place. Add that to the fact that these dinners are few and far in between and are likely to be cancelled due to lack of guests, there's no incentive for people to utilize the "sharing economy" when there are far more plentiful and affordable traditional restaurants to choose from.

[Galloism]

Demand is already clear - there just isn't enough.

So my neighbor from El Salvador, who makes incredibly delicious soups, knows how much that I'd be willing to pay for her soups? Because... she's a mind-reader? Because... my WTP for her soups will always be exactly the same?

So Royksopp, who makes incredibly delicious songs, knows how much that I'd be willing to pay for their songs? Because... they are mind-readers? Because... my WTP for their songs will always be exactly the same?

So you, who make an occasionally decent post, know how much that I'd be willing to pay for your posts? Because... you're a mind-reader? Because my WTP for your posts will always be exactly the same?

Demand being clear is the exception rather than the rule.

Imagine a world in which demand was perfectly opaque. Would you want to live in this world? Of course not. It would be hell.

Is our current world hell? The degree to which it is not hell reflects the degree to which demand is clear. To what degree is demand clear? Again, demand being clear is the exception rather than the rule. Therefore, our world is a lot closer to hell than heaven.

Why would your neighbor cook enough soup for you every night on the off chance you'll buy it some nights? He wouldn't be a very smart neighbor if he did that. He'd probably lose money.

[The Two Jerseys]

So my neighbor from El Salvador, who makes incredibly delicious soups, knows how much that I'd be willing to pay for her soups? Because... she's a mind-reader? Because... my WTP for her soups will always be exactly the same?

So Royksopp, who makes incredibly delicious songs, knows how much that I'd be willing to pay for their songs? Because... they are mind-readers? Because... my WTP for their songs will always be exactly the same?

So you, who make an occasionally decent post, know how much that I'd be willing to pay for your posts? Because... you're a mind-reader? Because my WTP for your posts will always be exactly the same?

Demand being clear is the exception rather than the rule.

Imagine a world in which demand was perfectly opaque. Would you want to live in this world? Of course not. It would be hell.

Is our current world hell? The degree to which it is not hell reflects the degree to which demand is clear. To what degree is demand clear? Again, demand being clear is the exception rather than the rule. Therefore, our world is a lot closer to hell than heaven.

Why would your neighbor cook enough soup for you every night on the off chance you'll buy it some nights? He wouldn't be a very smart neighbor if he did that. He'd probably lose money.

He wouldn't be very smart either if he gave a damn what you're willing to pay and didn't just set his price based on the cost of the ingredients.

[Liberaxia]

Yeah, Liberaxia, see what I mean?

Maybe?

[Xerographica]

So you ignore the rest of the post and cherrypick the one sentence that has already been explained by said post...

The rest of the post was based on the assumption that the demand is clear. I explained that the demand is not clear.

From the article that I cited:

On a Thursday in the last week of March, the app EatWith had five different dinners available for the upcoming weekend. Despite a unanimous four and a half or five star rating for each host, each of them had at least five seats left. These are for dinner parties that range in size from five to 12. In all likelihood, many of these will end up cancelled at the last minute.

If a dinner party for 12 has at least 5 seats left... perhaps it has 5 seats taken. But, this is the One-Price-Fits-All (OPFA) approach. The problem with the OPFA approach is that one price does NOT fit all. We know that the people who had reserved the seats were willing to pay the asking price. But we don't know how much higher than the asking price they would have been willing to pay. It's entirely possible that they would have been willing to pay enough for it to be worth the host's time and effort.

Here's what I wrote in the OP...

Personally, I think it's pretty stupid to try and use the OPFA approach because... if your WTP was high enough... I'd certainly wake up at 2 in the morning and get started preparing my world famous BBQ. Ok, my BBQ isn't world famous (yet). Uh, in order to avoid being constantly woken up by notifications... the app would give the following option... "Don't notify me for anything less than $ ________"

You accuse me of cherry picking Maqo's post when Maqo's post didn't even address this point that I made in the OP.

Obviously right now I'm not BBQ'ing. My decision to reply to you rather than to BBQ is obviously based on the information that's currently available to me. The question is... how much relevant and necessary information am I missing? Right now I have absolutely no idea how much money anybody in my area would be willing to pay for me to BBQ for them. If I had this information, then my decisions would be much more informed/valuable.

Conversely, when some of my neighbors are BBQ'ing it smells delicious. My neighbors have absolutely no idea how much money that I, or any other neighbors, would be willing to pay to have some of their BBQ.

Again, demand being clear is the exception rather than the rule. If you could understand why this is such a problem, then all of our lives would be fundamentally and immensely better.

[The Two Jerseys]

So you ignore the rest of the post and cherrypick the one sentence that has already been explained by said post...

The rest of the post was based on the assumption that the demand is clear. I explained that the demand is not clear.

From the article that I cited:

On a Thursday in the last week of March, the app EatWith had five different dinners available for the upcoming weekend. Despite a unanimous four and a half or five star rating for each host, each of them had at least five seats left. These are for dinner parties that range in size from five to 12. In all likelihood, many of these will end up cancelled at the last minute.

If a dinner party for 12 has at least 5 seats left... perhaps it has 5 seats taken. But, this is the One-Price-Fits-All (OPFA) approach. The problem with the OPFA approach is that one price does NOT fit all. We know that the people who had reserved the seats were willing to pay the asking price. But we don't know how much higher than the asking price they would have been willing to pay. It's entirely possible that they would have been willing to pay enough for it to be worth the host's time and effort.

When covering your production costs comes down to praying that customers will pay well over the asking price for whatever you're selling them, you really need to start rethinking your business model.

And demand is known: if you have 5 empty seats at a dinner for 12, then only 7 people wanted to pay the price you're asking for the food.

[Xerographica]

The rest of the post was based on the assumption that the demand is clear. I explained that the demand is not clear.

From the article that I cited:

If a dinner party for 12 has at least 5 seats left... perhaps it has 5 seats taken. But, this is the One-Price-Fits-All (OPFA) approach. The problem with the OPFA approach is that one price does NOT fit all. We know that the people who had reserved the seats were willing to pay the asking price. But we don't know how much higher than the asking price they would have been willing to pay. It's entirely possible that they would have been willing to pay enough for it to be worth the host's time and effort.

When covering your production costs comes down to praying that customers will pay well over the asking price for whatever you're selling them, you really need to start rethinking your business model.

Again, you're still not addressing what I wrote in the OP...

Personally, I think it's pretty stupid to try and use the OPFA approach because... if your WTP was high enough... I'd certainly wake up at 2 in the morning and get started preparing my world famous BBQ. Ok, my BBQ isn't world famous (yet). Uh, in order to avoid being constantly woken up by notifications... the app would give the following option... "Don't notify me for anything less than $ ________"

The customers' WTP would determine my decisions. If the customers' WTP was not high enough... then I wouldn't receive a notification and I'd continue to sleep. If the customers' WTP was high enough... then I'd receive a notification... accept their bid... get out of bed and start cooking. The amount of BBQ I made and sold each week would determine my production costs.

And demand is known: if you have 5 empty seats at a dinner for 12, then only 7 people wanted to pay the price you're asking for the food.

So it would have been a deal breaker for the 7 people if the price was a penny higher? What about two pennies higher? What about a nickle higher?

It's fundamentally absurd to believe that 7 different people are going to value the same meal equally.

[The Two Jerseys]

When covering your production costs comes down to praying that customers will pay well over the asking price for whatever you're selling them, you really need to start rethinking your business model.

Again, you're still not addressing what I wrote in the OP...

Personally, I think it's pretty stupid to try and use the OPFA approach because... if your WTP was high enough... I'd certainly wake up at 2 in the morning and get started preparing my world famous BBQ. Ok, my BBQ isn't world famous (yet). Uh, in order to avoid being constantly woken up by notifications... the app would give the following option... "Don't notify me for anything less than $ ________"

The customers' WTP would determine my decisions. If the customers' WTP was not high enough... then I wouldn't receive a notification and I'd continue to sleep. If the customers' WTP was high enough... then I'd receive a notification... accept their bid... get out of bed and start cooking. The amount of BBQ I made and sold each week would determine my production costs.

And when you refuse to get out of bed at 2 am because you're not willing to accept an offer lower than $X, all that meat you have sitting in the refrigerator is going to spoil, costing you money.

Meanwhile, the guy across the street charging $10 a plate is covering his expenses through sales volume.

And demand is known: if you have 5 empty seats at a dinner for 12, then only 7 people wanted to pay the price you're asking for the food.

So it would have been a deal breaker for the 7 people if the price was a penny higher? What about two pennies higher? What about a nickle higher?

It's fundamentally absurd to believe that 7 different people are going to value the same meal equally.

It's fundamentally absurd to believe that the customers in a half-empty restaurant are going to be willing to shell out more than the advertised price of their meal just to cover your operating expenses.

[Maqo]

If a dinner party for 12 has at least 5 seats left... perhaps it has 5 seats taken. But, this is the One-Price-Fits-All (OPFA) approach. The problem with the OPFA approach is that one price does NOT fit all. We know that the people who had reserved the seats were willing to pay the asking price. But we don't know how much higher than the asking price they would have been willing to pay. It's entirely possible that they would have been willing to pay enough for it to be worth the host's time and effort.

So essentially:
If I as a cook think I need 10 people paying $50 each to make cooking the meal worthwhile.
And when advertising in advance, I sell only 5 seats at $50 each. Those 5 people were willing to pay at least $50, but potentially some unknown amount more.
You're saying that possibly, these 5 people could have been willing to pay $100 each, which would have made the exercise worthwhile. Is that right?


It seems very unrealistic to expect that a small number of people are willing to pay a price that is such a large degree higher than everyone else's. Modern thought is that price would fall along a bell curve. Sure, there might be that one person in the world that is willing to pay $1000 for you to cook them dinner, but keeping fresh ingredients in your fridge every day for a year until that one person comes along is still likely to net you a loss. If you can only get 5 people to pay $50, then it seems highly likely that the WTP of those 5 people is going to be in the ballpark of $50 anyway.

The whole 'seller hides the price' thing is pointless as well. Every potential diner still has the incentive to place lowball offers ($1, then $2, then $3.... ) up until their offer is accepted. Every potential cook has the incentive to advertise their lowest WTA, because otherwise they will be undercut by other people selling the same thing that do advertise their WTA.
Because remember, these businesses have a lot of competition in restaurants and fast food (and services which will pick up from restaurants and deliver to your house). So if I know that a restaurant close by me is offering steak for $25, and someone using your app idea is offering a steak dinner, my offer to them is going to be $24. If they decline, I'll go the the restaurant.

The idea is further confounded by the concept of doing this *on demand*, with only minutes or hours of notice. The businesses you linked were advertising their dinner parties far in advance, giving the cooks time to prepare. They can order in the ingredients ahead of time, get fresh meat and fruit and vegetables, do their timely preparation like marinades or sauces the day before. They can plan ahead to set aside the day. If you do this "on demand" however, you don't have any of that. Someone would demand a considerable 'inconvenience fee' to drop everything they had planned on a night to start cooking for you immediately. Alternatively, they would demand a considerable amount to set aside an entire night of their week in the hope that they get possibly 2 sets of diners in. This is almost certainly not a viable business model when there are existing services (restaurants) that don't charge this large inconvenience fee.

There are tons of business ideas that just don't exist at all, not because demand is unclear, but because it is blindingly clear that the business wouldn't work. This is one of those ideas.

[Xerographica]

So essentially:
If I as a cook think I need 10 people paying $50 each to make cooking the meal worthwhile.
And when advertising in advance, I sell only 5 seats at $50 each. Those 5 people were willing to pay at least $50, but potentially some unknown amount more.
You're saying that possibly, these 5 people could have been willing to pay $100 each, which would have made the exercise worthwhile. Is that right?

If I'm saying that it's highly unlikely that all 5 people think the meal is worth exactly $50 dollars... then it should be obvious that I'm going to say that it's highly unlikely that all 5 people think the meal is worth exactly $100 dollars. People don't value things equally. This is why the OPFA approach will always be inferior. In other words, there's less honesty with OPFA... which is why it will largely fail to maximize benefit.

With a more honest approach... the more valuable decision is likely to be made. We know that the 5 people think the meal is worth at least $50 dollars. So their honest estimate of the meal's worth is greater than $50. And, obviously, the more they are willing to pay... the more likely it is that the meal will happen.

Again, this is pretty much the free-rider problem...

allocation < valuation

The more dishonest everybody is... "I don't really value clean air THAT much"... the less valuable the supply will be. So, in a nutshell... when everybody’s valuations are far more accessible, everybody’s decisions will be far more valuable.

We've been over this so many times! You said something like... "People's valuations of my posts wouldn't influence my decision whether or not to post". But the large bulk of benefit that's created is the result of everybody making decisions on the basis of other people's valuations. I'm hiking along and I see a large rock sitting in the middle of the path. Do I pick it up and carry it with me? Not if it's just a regular rock. But if it's gold... of course I would! Because... I personally can use gold? Because I would go home and somehow transform the large gold rock into a large gold chain that I'd add to my collection of gold chains? Because I'm basically Mr. T? My decision to pick up and carry the the gold rock wouldn't reflect my personal ability to use gold... it would reflect my knowledge of other people's valuation of gold.

The gold rush was a rush because, and only because, lots of consumers were willing to pay a high price for gold. It's not a difficult concept. Consumers choose what's worth their sacrifice... and producers allocate themselves and society's resources accordingly. The more honestly consumers communicate their valuations... the more valuable the allocations. Again, when everybody's valuations are far more accessible, everybody's decisions will be far more valuable.

You understand why the gold rush was a rush... but you don't see the benefit of replacing OPFA with OPDNFA (One-Price-Does-Not-Fit-All) . You agree that the free-rider problem is a real problem... but you don't see the benefit of facilitating more honest communication of valuations. You see the problem with dishonesty... but you don't see the benefit of facilitating honesty.

Like I said last time, it would behoove you to sit down and come up with a coherent story.

[Sanctissima]

So essentially:
If I as a cook think I need 10 people paying $50 each to make cooking the meal worthwhile.
And when advertising in advance, I sell only 5 seats at $50 each. Those 5 people were willing to pay at least $50, but potentially some unknown amount more.
You're saying that possibly, these 5 people could have been willing to pay $100 each, which would have made the exercise worthwhile. Is that right?

If I'm saying that it's highly unlikely that all 5 people think the meal is worth exactly $50 dollars... then it should be obvious that I'm going to say that it's highly unlikely that all 5 people think the meal is worth exactly $100 dollars. People don't value things equally. This is why the OPFA approach will always be inferior. In other words, there's less honesty with OPFA... which is why it will largely fail to maximize benefit.

With a more honest approach... the more valuable decision is likely to be made. We know that the 5 people think the meal is worth at least $50 dollars. So their honest estimate of the meal's worth is greater than $50. And, obviously, the more they are willing to pay... the more likely it is that the meal will happen.

Again, this is pretty much the free-rider problem...

allocation < valuation

The more dishonest everybody is... "I don't really value clean air THAT much"... the less valuable the supply will be. So, in a nutshell... when everybody’s valuations are far more accessible, everybody’s decisions will be far more valuable.

We've been over this so many times! You said something like... "People's valuations of my posts wouldn't influence my decision whether or not to post". But the large bulk of benefit that's created is the result of everybody making decisions on the basis of other people's valuations. I'm hiking along and I see a large rock sitting in the middle of the path. Do I pick it up and carry it with me? Not if it's just a regular rock. But if it's gold... of course I would! Because... I personally can use gold? Because I would go home and somehow transform the large gold rock into a large gold chain that I'd add to my collection of gold chains? Because I'm basically Mr. T? My decision to pick up and carry the the gold rock wouldn't reflect my personal ability to use gold... it would reflect my knowledge of other people's valuation of gold.

The gold rush was a rush because, and only because, lots of consumers were willing to pay a high price for gold. It's not a difficult concept. Consumers choose what's worth their sacrifice... and producers allocate themselves and society's resources accordingly. The more honestly consumers communicate their valuations... the more valuable the allocations. Again, when everybody's valuations are far more accessible, everybody's decisions will be far more valuable.

You understand why the gold rush was a rush... but you don't see the benefit of replacing OPFA with OPDNFA (One-Price-Does-Not-Fit-All) . You agree that the free-rider problem is a real problem... but you don't see the benefit of facilitating more honest communication of valuations. You see the problem with dishonesty... but you don't see the benefit of facilitating honesty.

Like I said last time, it would behoove you to sit down and come up with a coherent story.

The problem I see with what you're suggesting is that it can only work in niche markets. In a situation like the one you provided, where it's a reservations-only higher class kind of dining, then sure, a more haggling-oriented system can work. Problematically though, it would simply be far too complicated to apply this kind of system to macroeconomics. Sure, the semi-private chef could easily pull it off, but massive supermarket chains could not, simply because it would be far too complicated to have every customer that comes in essentially negotiating the price of their groceries. In most cases, One-Price-Fits-All policies are used simply because they're the most effective.

[Xerographica]

The problem I see with what you're suggesting is that it can only work in niche markets. In a situation like the one you provided, where it's a reservations-only higher class kind of dining, then sure, a more haggling-oriented system can work. Problematically though, it would simply be far too complicated to apply this kind of system to macroeconomics. Sure, the semi-private chef could easily pull it off, but massive supermarket chains could not, simply because it would be far too complicated to have every customer that comes in essentially negotiating the price of their groceries. In most cases, One-Price-Fits-All policies are used simply because they're the most effective.

Haggling implies dishonesty. The best OPDNFA approach would eliminate any dishonesty. EBay has lots of OPFA items (ie "buy it now")... but it also has lots of OPDNFA items (ie "bid"). But even with their OPDNFA approach there's dishonesty. Everybody's first bid is always lower than their true valuation...

allocation < valuation

The exception to this rule is when the bidder isn't willing to bid any higher than their first bid.

How would we structure an auction website if we wanted to minimize dishonesty? You'd only be able to bid once on a item. Would you be able to see the highest bid? Well... if you couldn't see the highest bid... then you might waste your time bidding on items that already had higher bids. However, I don't think that you should be able to see the highest bid because it would be useful for the seller if they could see the range of bids. The distribution of bids would help them decide whether it was worth it for them to list the same, or similar, items in the future. The more valuable the distribution of bids... the more likely it is that the seller would think it worthwhile to sell similar items in the future.

Event though you would only be able to bid once on a item... I think you should be able to change your bid. There's a pretty good chance that your valuation of the item will change over time. The longer the auction... the more likely it is that your valuation will change.

When the auction ended... whoever had submitted the highest bid would win the item.

With this approach... the chances of getting a "deal" would be minimized. Right? Sure you could submit bids that were considerably lower than your valuations... and in some cases you might even win the items. But I think that in most cases honesty would be the best policy.

And it might sound super stupid to create a website that minimizes the chances of getting deals. But getting a deal is short-termism. It's beneficial, in the short run, for the consumer to get a deal. But in the long run... it's never beneficial to lie to producers. So with this website that minimizes dishonesty (and the chances of getting deals)... the supply of available items would quickly become far more valuable compared to websites which did not minimize dishonesty.

As far as a supermarket is concerned... well...

There's a difference between...

A. Minimizing dishonesty is desirable
B. Minimizing dishonesty is impractical

It kinda sounds like you're arguing B... which kinda implies that you accept A. But if you truly accept A... then the goal should be to come up with solutions that make it practical to minimize dishonesty.

"Sectornomics" is my big picture solution. But I'm not quite sure about how specific the sectors should be.

Perhaps the most general system would be to have two sectors...

A. Public
B. Private

If the rate was 50%... then you'd have to spend half your money in the public sector and the other half in the private sector. You would be able to choose which items you spent your money on. If your income was $100,000... then you would be able to spend $50,000 on items in the private sector. It would be entirely up to you how you divvied up your $50k between food, clothes and all the other items in the private sector.

Would it be beneficial to break the private sector into more specific sectors? For example... we might have a sector just for food. Everybody would have to spend say 5% of their income on food. So you would have to spend $5k on food. When you know, for a fact, that you're going to have to spend $5k on food... it becomes pointless to lie about your food valuations. As a result, short-termism goes out the window and the supply of food would improve accordingly. The issue is whether 5% is anywhere close to the optimal percentage. The amount of money that you spent on spinach might be correct relative to the amount of money that you spent on steak... but, if the 5% was too low or too high, then the amount of money that you spent on spinach would be incorrect relative to the amount of money that you spent on shoes. The proportion would be correct within the sector... but incorrect between sectors. You would be communicating to producers that you value food more (or less) than you actually do.

Anyways, the important part is thoroughly understanding the benefit of facilitating honesty. Facilitating honesty minimizes short-termism... and minimizing short-termism maximizes the value of the supply... and maximizing the value of the supply maximizes society's benefit.

Everybody benefits when consumers are honest with producers. In the future this is going to be a no-brainer.