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Who would have thought? For two months, economists at the University of Chicago worked with King to manipulate the prices of in-game purchases. Surprisingly, the virtual commodity is not sold with particularly nonlinear pricing. This is elementary retail theory, and we all fall for it constantly. So you would think a commodity that is literally unlimited and costs nothing would be a great one to offer crazy nonlinear pricing on. Yet bitcoin bubble bursts candy crush soda buy both — at very different frequencies, of course.
The economists thought it would be interesting to introduce nonlinear pricing and see bitcoin bubble bursts candy crush soda that affected which users bought gold bars and when. Over two months, they and King systematically offered various discounts to over 14 million bitcoin bubble bursts candy crush soda.
Well, not quite nothing, but even deep discounts like a 70 percent lower cost per unit failed to produce higher profits or more than marginally greater sales volume. In fact, some of the data suggested that people who would have bought small packs of gold may have decided not to because the discounted big packs made the small ones look like a bad deal! People who never bought anything continued to buy nothing. People who occasionally bought a small pack spent a bit more on deep discounts.
And people who bought big packs spent less, canceling the others out. The ultimate conclusion of our experiment is that the potential gains to King from the forms of price discrimination we explored are remarkably small, in contrast to what one might have expected based on the prior theoretical and empirical literature.
Why does this happen? What is the psychology behind in-app purchases, and why does it differ so much from retail ones, where this pricing strategy would have had a much greater effect?
Is there a pricing technique that would make a difference? The paper, published earlier this week in the Proceedings of the National Academy of Sciencesis very readable.
Just what you need for a quiet Friday evening! The result of bitcoin bubble bursts candy crush soda their behind-the-scenes machinations? A big fat nothing.