Comments on: The game theory of buying clothes, and why money tips are often short-lived http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/ Articles on game theory and personal finance Thu, 18 Mar 2010 15:31:32 -0500 http://wordpress.org/?v=2.9.2 hourly 1 By: talkbooks » Game Theory Tuesdays: Shopping for Clothes and the Problem of … http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/comment-page-1/#comment-440 talkbooks » Game Theory Tuesdays: Shopping for Clothes and the Problem of … Sun, 04 Nov 2007 21:31:43 +0000 http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/#comment-440 [...] full story here [...] [...] full story here [...]

]]> By: RohoMech http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/comment-page-1/#comment-424 RohoMech Wed, 31 Oct 2007 18:29:15 +0000 http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/#comment-424 @Presh, another tactic that's I believe isn't legal is raising prices before having a sale. In your Kohl's example, they could just raise their normal prices but only expect to sell the item when its on "clearance". So, they have a shirt which should be $30, but they start the shirt at $60 (for a day) and immediately slash its price 50%!!! Couple that with the inventory changing and you'd give customers the false idea that the cloths are popular (social proof!) and reasonably-priced. @Presh, another tactic that’s I believe isn’t legal is raising prices before having a sale. In your Kohl’s example, they could just raise their normal prices but only expect to sell the item when its on “clearance”. So, they have a shirt which should be $30, but they start the shirt at $60 (for a day) and immediately slash its price 50%!!! Couple that with the inventory changing and you’d give customers the false idea that the cloths are popular (social proof!) and reasonably-priced.

]]> By: Presh http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/comment-page-1/#comment-422 Presh Wed, 31 Oct 2007 04:01:39 +0000 http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/#comment-422 @Dan S.: Yes, I have also succumbed to the artificial urgency that Costco...I have seen their beer selection rotates quite a bit. @Joon: Buying the shirt immediately is a "greedy" algorithm and not an optimal one. In the particular structure of the game, it is worth it to wait. I agree that in real life that the game is different, so I used the example more as a point of comparison. We could have also assumed the first retail price was $50 or $60, so you might decide to wait. But then I could not illustrate how they force you to buy retail when they stop discounting. @Joe P: It is interesting you brought up Kohl's because this is one store that really does discount 50-75% if you wait till end of season, so when you do head back, check those clearance racks. @Dan S.: Yes, I have also succumbed to the artificial urgency that Costco…I have seen their beer selection rotates quite a bit.

@Joon: Buying the shirt immediately is a “greedy” algorithm and not an optimal one. In the particular structure of the game, it is worth it to wait. I agree that in real life that the game is different, so I used the example more as a point of comparison. We could have also assumed the first retail price was $50 or $60, so you might decide to wait. But then I could not illustrate how they force you to buy retail when they stop discounting.

@Joe P: It is interesting you brought up Kohl’s because this is one store that really does discount 50-75% if you wait till end of season, so when you do head back, check those clearance racks.

]]> By: Joe P http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/comment-page-1/#comment-420 Joe P Wed, 31 Oct 2007 00:00:38 +0000 http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/#comment-420 That's why I just shop at Kohl's for clothing anyway - their pretty cheap to begin with. Although to be honest I hvaen't bought new clothing in several years (that might explain why I still own and wear the shirt from the first time I got my driver's license) That’s why I just shop at Kohl’s for clothing anyway – their pretty cheap to begin with. Although to be honest I hvaen’t bought new clothing in several years (that might explain why I still own and wear the shirt from the first time I got my driver’s license)

]]> By: Joon http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/comment-page-1/#comment-416 Joon Tue, 30 Oct 2007 19:37:39 +0000 http://mindyourdecisions.com/blog/2007/10/30/game-theory-tuesdays-shopping-for-clothes-and-the-problem-of-using-money-tips/#comment-416 If you value something at $50 but it is priced at $40, wouldn't you buy it? I understand that a larger positive return is more attractive. But say if you pick up an item expecting it to be $50, and it is actually priced at $40, wouldn't you just buy it? People who shop at Zara on a regular basis, typically have an inflated sense of value anyways. If this practice was applied at the GAP, I highly doubt it would succeed. I do understand the point that a retailer is trying to train its consumers, but at a certain level wouldn't competitive balance force the retailer to create incentives for the consumer again. If you value something at $50 but it is priced at $40, wouldn’t you buy it? I understand that a larger positive return is more attractive. But say if you pick up an item expecting it to be $50, and it is actually priced at $40, wouldn’t you just buy it?

People who shop at Zara on a regular basis, typically have an inflated sense of value anyways.

If this practice was applied at the GAP, I highly doubt it would succeed.

I do understand the point that a retailer is trying to train its consumers, but at a certain level wouldn’t competitive balance force the retailer to create incentives for the consumer again.

]]>