Direct Utility Pricing • 13 June 2008 • The SnowBlog

Direct Utility Pricing

I might have shared this with you before, good webfolk, but I thought it worth mentioning again. If you glance at an economics books you'll see the concept of 'utility'. Utility is sort of the benefit a person gets from something expressed as a sum of money. If an ice cream buys you five pounds of happiness, but only costs two pounds then it's a bargain. It's a slightly weird concept, but you can think of it the other way round: once you know what an ice cream tastes like you can ask yourself what's the maximum amount you'd ever spend on one. That's its utility to you. Obviously it will vary from person to person. Now, ideally one would set the price of, say, a book equal to its utility for each individual. Any less and you're giving it away, any more and you'll lose the sale. But how to do that? A different facet of the same question presents itself when you think about how (to follow on from a comment on my last post) the publishing industry makes no attempt to work out which book sales resulted in happy customers and which left the reader feeling ripped off. The answer: read the book while you're inside a functional imager like an MRI* machine. The price you pay will be based on how much pleasure the machine records you experiencing as you turn the pages. If it was a dud, you get it for free. But make sure you've got your cheque book handy if it's one of those real life-changing riproaring classics. And hopefully, in time, the imaging equipment can made to fit inside the kind of gentleman's smoking cap most of us typically wear when reading. Chin, chin. *I'm rusty on these matters. Would a SQUID or a PET scanner or a Neutron-Boron Capture Device be better than functional MRI?


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