Ariely / Behavioral Economics / Consumer Behavior / Predictably Irrational

Consumer behavior On Unbundling – Valuing Free

 United Airlines used to run an Ad showing their early days when a business man hitches a ride on a two-seater. The pilot asks, ” let us see, you want to have coffee, while we are in the air?”. As far as we can look back air travel always included the entire package, from free … Continue reading

Economic Model / Gaming / Gift Cads / Hal Varian / IMVU / Nexon / Online Gaming

Where to start looking for modeling Unbundling

In his paper titled, How to Build an Economic Model in Your Spare Time, Hal Varian, UC Berkeley Professor now serving as Chief Economist at Google says this about where to get ideas:  I think that you should look for your ideas outside the academic journals—in newspapers, in magazines, in conversations, and in TV and … Continue reading

Credit Card / Gift cards / Transaction Costs / Unbundling

Transaction Costs of Unbundled Pricing

First you buy a plane ticket, then pay curbside check-in and for baggage fees at the airport. Once in the plane you pay, separately, for drinks, meals, pillows, inflight movie, Wifi.  Fortunately you can complete all these transactions with your credit card. The price of the additional services you used are large enough, in the … Continue reading

Baggage Fees / Fair Price / Fairness

When Baggage Fees Unbundling Was First Introduced

In 2006, when Ryan Air decided to offer a no-frill service to keep its advertised price for airline ticket low, it offered a basic service and charged for everything else. The Economist reported (this time a news piece and not a views piece), posing the question, “Why airlines have started charging for check-in bags?”. The … Continue reading

Airline / Consumer Behavior / Fair Price / Fairness

Fairness Questions on Unbundled Pricing

There is a scathing opinion piece in The Econonist web-only edition on the Airline fees. Titled, “Come fly the fee-filled skies“, the article frames the entire unbundled pricing as a fairness question wondering whether the passengers will be asked to pay for reclining in their seats or using the bathroom. And in the midst of … Continue reading

Modularity / Newspaper / System Integration / Unbundling

Unbundling Of Industrial Systems

In their paper titled, Unbundling of Industrial System, LYNN O. WILSON, ALLEN M. WEISS, and GEORGE JOHN  talk about unbundling as a decision problem for a firm selling multicomponent system.  Combined with the Strategic Bundling paper I have referred before, the two model criteria for deciding when to unbundle and not. In Unbundling of Industrial … Continue reading