How much for the steak?
For most of human history, the price of any given thing was whatever a buyer and a seller could agree on. The price tag — and the world of fixed prices that it implies— didn't come along until the 19th century, with the rise of department stores.
Economists, for the most part, think fixed prices are silly. Why should a movie theater sell tickets to the sold-out blockbuster for the same price as tickets to the bomb that's playing to an empty house? Why not jack up the price for the blockbuster and sell tickets to the bomb at a steep discount? (A Stanford economist actually tried to answer this question.)
Movie theaters still aren't slashing prices to fill seats. But lots of other industries have actually been moving away from fixed prices in the past few years.
Most Major League Baseball teams now charge lower prices when rain is in the forecast, and higher prices when a superstar comes to town. Grocery stores are experimenting with using loyalty cards to offer customized prices to individual consumers. And, today's NYT reports, restaurants are trying out variable pricing as well:
While airlines and hotels have figured out how to vary prices to fill flights and rooms, restaurants' methods have largely remained in the icebox age. Now, some restaurants are borrowing a tactic from other hospitality businesses and charging different prices for meals at different times.
The restaurants' premise is that a dinner at an 8 p.m. on Saturday should simply cost more than one at 5:30 on a Monday. "Restaurants are catching up," said Sheryl E. Kimes, professor of operations management at Cornell's school of hotel administration. They are betting that consumers, used to paying extra for holiday-weekend flights, V.I.P. seats at the theater or umbrellas on the street after the first raindrop hits, will also pay more for their Friday-night dinners out.