Knowing and Making

I can't post on Felix Salmon's blog, so here's a comment I wanted to write on this amusing post about free ice cream: The answer to 65% of all thought experiments on economics blogs: selection effect. The "you" to whom Dan's question is addressed is a different set of people to the "they" who'd turn up for a free cash offer. Though of course, there is a bit of a framing effect too. The question of demographic effects in behavioural experiments is underinvestigated (though there are a few papers about cultural differences, especially in the ultimatum game).

A good friend sent me a link to this unintentionally hilarious article about pricing on the iPhone App Store . I burst out laughing at the writer's tone of utter outrage . App developers are charging the price the market will bear, and it is lower than his moral intuition tells him it should be? The list of "complaints" in this article is hilarious: People used to sell apps for $50/year on Windows. When they moved to the iPhone, the optimal strategy was to sell it for $10/year. Therefore they sell it for $10/year. NO, REALLY? "Not all of the people investing time and money in their products are reaping the returns they expected." NO, REALLY? Someone had to price his app not on the basis of how much work he put in, but on the basis of what people would pay for it. NO, REALLY? The top ten apps list (which is based on the number of items sold, like every other top ten list in the world) is dominated by cheap applications and not by expensive ones. NO, REALLY? As t...