This is the Quality Contributions Roundup. It showcases interesting and well-written comments and posts from the period covered. If you want to get an idea of what this community is about or how we want you to participate, look no further (except the rules maybe--those might be important too).
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These are mostly chronologically ordered, but I have in some cases tried to cluster comments by topic so if there is something you are looking for (or trying to avoid), this might be helpful. Here we go:
Quality Contributions to the Main Motte
Contributions for the week of April 3, 2023
Recognition Diplomacy
Contributions for the week of April 10, 2023
Transitive Reasoning
Contributions for the week of April 17, 2023
Identity Politics
Contributions for the week of April 24, 2023
- "What is going in Sudan is a practical demonstration that being a global power does not mean that everything going on in the world is secretly about you."
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Notes -
I don't think you're using my premises.
Let's set aside life threatening scenarios, because I'm not entirely sure how my argument interfaces with them, and trying to assign personal valuations to them probably ends up with infinity dollars or something silly. Similarly, let's set aside issues of bankruptcy, and issues of involuntary treatment. And assume we're dealing with amounts of money which a person either can afford, or can afford by going into debt that they eventually mostly pay off. The clinic will treat its sale price as the amount of money they actually expect to receive from someone.
I'm fine with conceding that limited price discrimination can have positive effects, as you point out. But I'm specifically referring to perfect or near perfect price discrimination. That is, there is some level X, such that you are perfectly indifferent between receiving no treatment, and receiving treatment that costs $X. If it cost $10 million dollars and put you in debt for the rest of your life, you'd be better off untreated and saving your money, so X is less than 10 million. If it cost $1 you'd be better off with treatment, so X is greater than $1. Intermediate value theorem, or iterate, or whatever, we find some finite value, which differs from person to person based on some combination of their finances, how bad the injury i, how much they hate being in debt, how much social support they have, etc, at which they are perfectly indifferent, the scenario in which they go untreated is exactly the same value as the scenario in which they pay X and get treated. The treatment increases their utility by the exact same amount that losing $X decreases their utility, so if they paid $X for treatment they have gained nothing on net. If the clinic has some cost C for the procedure, then they are willing to charge any amount P > C. The client is willing to pay any amount P < X. Therefore any price P with the property C < P < X is mutually acceptable to both parties. The clinic profits P - C, the client "profits" X - P, and both are greater than zero. A normal sane version of price discrimination would pick some value near the middle of the interval (C,X), such that both have nontrivial profit.
However, if the clinic has perfect knowledge of X, and is selfish, they will pick some amount trivially less than X. The doctor is only going to charge you $1000 if their costs are less than $1000 and that is every last cent you have to your name or can scrounge up by going into debt. Take whatever money is the most you could possibly be willing to part with to undergo the procedure, such that if it cost a single dollar more you'd be better off untreated, and the doctor charges you exactly that much, such that the monetary cost to you is so painful it's only a tiny bit. By definition, if the person is benefiting a nontrivial amount from the transaction, we are not in this scenario. I am defining "perfect price discrimination" to be this, this is not itself an argument.
My argument can be broken down as:
1: Perfect Price Discrimination as defined is as coherent concept and isn't some contradiction of terms.
2: Perfect Price Discrimination would follow from a perfectly rational/selfish producer with perfect knowledge of their client's utility function.
3: Perfect Price Discrimination is a tiny bit better for each clients than a scenario in which they are not served at all, but worse than any other pricing mechanism in which they are served (because it gives them the least possible nonzero surplus), including imperfect price discrimination.
4: Price Discrimination scenarios increasingly approach Perfect Price Discrimination as a price discriminating producer gains more knowledge.
On this last point, if the client has some imperfect knowledge of clients, like maybe it bins them into "poor" "average" and "rich" then maybe it sets up three prices, like $1k, $10k, $100k. Then all the poor people who value the treatment at $3k can benefit because they're only paying $1k for a treatment that improves their lives by $3k, but they couldn't afford the $10k cost, so they're genuinely better off by not having to reject treatment. Average people who value it $15k will benefit by $5k, because the price is lower than their valuation. Someone who by sheer coincidence values the treatment at $10,001 is screwed, because they'll be charged $10k and receive a trivial benefit, but if the prices are spaced out enough such people will be rare.
But if the producer gains enough data to accurately bin people by thousand dollars, ie it can detect and set prices at $1k, 2k, $3k..., then we're in worse shape. Now if someone has, say $3500 valuation, they pay $3k and only get $500 benefit. If someone has $23232 valuation, they pay $23k and get $232 benefit.
If the producer gains enough data to accurately bin people by tens of dollars, then nobody can benefit by more than ten dollars.
I'm not so much arguing that such extremes are realistic, I don't think a person themselves could accurately assign a monetary value to how much they would benefit from an action X even after having already received it, since they would have to compare to a counterfactual scenario in which they hadn't received it and had kept their money. But more information allowing for more accurate price discrimination can, in many cases, lead to lower consumer benefits. If you were previously in a scenario where you "couldn't afford" something (in the sense of it not being worth the money, not whether you literally have enough money), and the price discrimination puts it into an acceptable price then you're some amount better off. But if you were previously in a scenario where it was worth it, the price discrimination raises prices on you, squeezing out your value and making you worse off. And this happens incrementally, such that one supper accurate price discrimination is comparable to an initial discrimination that makes everyone be able to afford it, followed by a bunch of subsequent discrimination that squeeze all the value out. You seem to be under the impression that price discrimination = lowered prices, but it also means raised prices. You might consider it an incremental raising and lowering of prices on every single person until as much value as possible is squeezed out while still giving them barely enough to keep them consenting to the transaction.
At the extremes. I'm not attempting to apply my argument to all possible scenarios of price discrimination or suggest that it's always bad. Just that it can be bad when taken to extremes.
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