A Burqa for Prices
Hidden prices and competition
This framework discusses how hidden prices and competition can lead to a bad equilibrium, where companies advertise only one component of the total price and hide the rest.
- Hidden prices can lead to a bad equilibrium
- Competition can drive companies to hide prices
- Transparency is key to avoiding hidden prices
- Analyze the marketAnalyze the market and identify potential hidden prices and competition.Pro tipLook for patterns and structures in the marketWarningBe aware of the potential risks and consequences of hidden prices
Car rental companies
Car rental companies advertising low prices but hiding additional costs is an example of hidden prices and competition
OutcomeThe practice leads to a bad equilibrium and a lack of transparency
Not being transparent
Not being transparent can lead to a lack of trust and a bad equilibrium
The framework is inspired by the practice of car rental companies and cell phone providers advertising low prices but hiding additional costs.
Source · BOOK
The Art of Strategy: A Game Theorist's Guide to Success in Business and Life