Icosian Reflections

…a tendency to systematize and a keen sense

that we live in a broken world.

IN  WHICH Ross Rheingans-Yoo—a sometime economist, trader, artist, expat, poet, EA, and programmer—writes on things of int­erest.

(Naïve) microeconomics of bundling goods

Originally posted to LessWrong.

Junk fees are in the news from the 2023 State of the Union address, get picked up by Matt Yglesias, and Zvi responds in Junk Fees, Bundling and Unbundling. Matt and my former colleague propose an economic framing of "bundling versus unbundling", and Zvi identifies four win-win advantages of bundling, and four 'advantages' of unbundling (two win-wins, one (company win)-(customer lose), and one mixed win-lose).

I think Zvi is broadly right on the points he makes, but he and Matt both skip over the basic, conventional econ-101 analysis of bundling goods on prices and customer welfare. I think that, for a broader audience, it's worth covering the "naïve microeconomics" perspective as background for the customer-behavioral story (which, admittedly, is more juicy and fun). Rather than responding to the whole conversation, this post will restrict its focus to the econ-101 microeconomics story of bundling, and ignore the behavioral / political / moral dimensions that Zvi, Matt, and others are discussing.

I'm going

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