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Tinder’s pricing algorithm can charge users up to 5x more for same service

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Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#21

Post by jonway »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

My answer to that question is that the cost of the insurance varies based on demographics (you didn't mention the biggest variables like driving record, vehicle type, loan/lein and collision) while the Tinder service cost is basically the same for all users.

The most sense it makes for Tinder to do is to chage men more than women, which they already did.

Insurance cost is determined based on actuarial tables, whereas Tinder probably doesn't even consider the size of anyones table.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#22

Post by anonporridge »

atlgator wrote: post #16
anonporridge wrote: post #4

Earlier quoted context omitted.

I believe old OkCupid data (which has since been deleted from their blog) found exactly this. In short, males looking for females are very even in their rating of women along a bell curve. Females looking for males heavily skew towards the top 20% of males, while considering the bottom 80% "below average". Tinder, and every other dating app, absolutely take advantage of this deep truth of human psychology and milk th…

It was all published in a book called Dataclysm by Christian Rudder.

Thanks!

Ref, https://www.amazon.com/Dataclysm-Identity-What-Online-Offlin...

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#23

Post by wsdan »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

Insurance companies are supposed to increase the price t relative to the risk. So if you’re paying double the premium than someone else for car insurance, it’s because they have some data to suggest that you’re twice as, “risky.”

In the US, at least, you actually need to to get pre-approval for your prices and how you arrive at that price, and that information becomes public record.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#24

Post by PuppyTailWags »

8f2ab37a-ed6c wrote: post #13
car_analogy wrote: post #10

Earlier quoted context omitted.

> market becoming more efficient You mean a company becoming more efficient at extracting money from their un-informed customers. A company finding new ways to leverage their market power, position, and information asymmetry.

Why is that bad? That's how free markets work. Note, the post this is a reply to originally said "You mean a company becoming more efficient at extracting money from customers".

Inquiry: My understanding is that free markets work in a setting with informed consumers who can make educated choices between competing services.

Is my understanding incorrect?

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#25

Post by 8f2ab37a-ed6c »

hda2 wrote: post #11
8f2ab37a-ed6c wrote: post #6

Disclaimer: I think Tinder is a rent-extracting garbage app, BUT, philosophically speaking, why is dynamic pricing unfair? If the algorithm detects that based on your biography, location and usage patterns, you would keep using this service even if it charged you 5x as much, isn't that just the market becoming more efficient?

Because I'm being charged 5x for the exact same service. Want more money from your wealthy customers? Offer more in return.

To play the devil's advocate, could you not argue that this is more equitable? People of greater means pay more for the service, and keep the lights on for the less fortunate who still get to enjoy a well-funded product?

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#26

Post by toomuchtodo »

tmp_anon_22 wrote: post #19
roenxi wrote: post #12

1. It isn't obvious to me that dating for older people is to be treated as the same service as dating for younger people. There are profound differences. Dating as a 20 year old female is a completely different situation to dating as a 40 year old of either gender. 2. Even if it is the same service, what is the problem with Tinder charging some people an extra $20? This isn't an essential service in any way. 3. found…

Tinder doesn't sell dating. I'm not sure exactly what their product is, but its more to do with self-worth, impulse control and sexual gratification - even if some of their matches do produce relationships. The predatory monetization scheme makes more sense in that context.

Tinder sells access to women. It’s the online version of “ladies night”, where women get into the bar for free while men do not.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#27

Post by gnabgib »

They did update their pricing as a result of this[0] (article has the same date). Not that I condone their old model, but it's a shame the Mozilla article wasn't updated given their call to action is unnecessary.

[0]: https://www.consumerreports.org/consumer-protection/tinder-i...

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#28

Post by badlucklottery »

thanhhaimai wrote: post #8

Not a Tinder user or investor, but this makes me curious. Why is it okay for insurance companies to sell me products with hyper-personalized pricing (often based on sex, age, and race), but it's not okay for Tinder or other tech companies to do so?

I don't really have skin in the game (never used Tinder) but I would guess a combination of transparency and competition is what makes personalized pricing feel "fair".

It's well-known that insurance rates vary a lot from person to person (transparency) _and_ there's multiple insurance companies offering what's effectively the same service (competition). So, if I don't like the price, I can get my car/house/boat insured with someone else who will likely give me a different personalized price.

In this case Tinder seems to be working hard to keep the magnitude of the pricing variance secret and there's no real competition since Tinder's apps are the only way to access the service.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#29

Post by iratewizard »

jraby3 wrote: post #15
8f2ab37a-ed6c wrote: post #13

Earlier quoted context omitted.

Why is that bad? That's how free markets work. Note, the post this is a reply to originally said "You mean a company becoming more efficient at extracting money from customers".

Is it really a free market? Doesn’t the network effect create a monopoly?

Match group (which owns many of the major dating apps) definitely performs anti-competitive and borderline illegal behavior. But tinder is far from a monopoly. The fact that they own 22 dating app companies is testament to how easy it is to break into that market.

Re: Tinder’s pricing algorithm can charge users up to 5x more for same service

#30

Post by williamscales »

8f2ab37a-ed6c wrote: post #6

Disclaimer: I think Tinder is a rent-extracting garbage app, BUT, philosophically speaking, why is dynamic pricing unfair? If the algorithm detects that based on your biography, location and usage patterns, you would keep using this service even if it charged you 5x as much, isn't that just the market becoming more efficient?

I don’t think dynamic pricing is per se unfair. But I do find it a bit misleading when it’s presented as static pricing, i.e. “The price for Tinder gold is X” as opposed to “The price we will charge you for Tinder gold is X”. Folks might make different decisions if they were aware.
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