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Essay's paper info
| Topic: |
Business
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| Number of pages / Number of words: |
4 / 1047 |
Essay's paper body
Note the adjective "costly." A signal has to be costly; otherwise it wouldn't be effective in separating the price-sensitive and price-insensitive groups. Look at how Priceline does this same separation online. When you bid for a travel ticket, you are asked whether you are willing to be "flexible" in your departure time, number of connections and type of aircraft...
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Similarly, when you bid for groceries, you are asked to "tell us two or more brands you like." Consumers, by revealing their flexibility, are signaling that they are sensitive to price. Indeed, the very act of going through the "bidding" process for the online grocery purchase is the same sort of mindless activity as clipping coupons - busywork designed to separate the sheep from the goats (Varian, 2000...
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