Lack of allocation Seth’s Blog

If we are lucky, we invent something that will be in high demand. Reservations at a hot restaurant. Limited Edition Trading Card. Concert tickets…

Who decides how they get?

An interesting option is “first come first served.” It seems fair, after all. The theory is that people who really want what you have will spend time (wasting time) in line to show their commitment. But of course, it’s a tax, and an unequal one, since some people value their time more than others.

Another is to auction rare items. The good news is that the value of the scarce item will not be wasted on time wasted, but will go to the company. But this may seem unfair, as it rewards people with more wealth, as many things do. On the other hand, it is quite clear that people allocate resources differently than we expect.

The third method, the most beautiful of all, is to play a lottery. Invite your best customers, or charge a commitment fee and then randomly allocate loot The good news is that you won’t alienate customers who feel they didn’t wait in line long enough or spend enough.

Every decision has consequences. And it’s up to the producer what emotion they want to be responsible for creating.