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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

#31

Post by mattnewton »

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…

> 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.

I am not a lawyer, but I do know age is a protected class in the US. It could be seen as age based discrimination. My understanding is that protected classes are the same criteria we use to, for example make it illegal to have a separate price for different races.

Edit: as the article mentions, they have already been hit with a lawsuit about this issue on these grounds before https://news.bloomberglaw.com/us-law-week/tinders-24-million...

Though sex is also a protected class and plenty of establishments have preferential rates for ladies nights, so I am not sure how black and white the law really is here; that particular issue has a pretty back-and-forth history as far as I can tell, and maybe this would similarly have some kind of carve out? Definitely seems like a very large legal risk. https://en.m.wikipedia.org/wiki/Ladies%27_night#:~:text=Ladi....

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

#32

Post by 8f2ab37a-ed6c »

greatpostman wrote: post #9
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…

Yeah, basically they make you pay to tip the odds so in your favor that you might overcome that terrible ratio I quoted

I'm actually surprised that dating apps aren't doing more with monetization opportunities. There are plenty of whales out there who would be happy to deploy their disposable income for mating opportunities. Why not let someone spend $1000 a day to be the top displayed profile in a city for an entire day?

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

#33

Post by rahimnathwani »

hda2 wrote: post #20
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?

Because sex, age, and race are statistically significant factors in how much the insurance companies will pay out for each demographic. Personalized pricing for a digital service with a more-or-less constant cost-per-user doesn't make sense here (unless you want to maximize profits by unfairly discriminating against certain demographics).

Most people are fine with movie theatres charging children less than they charge adults.

Is that 'unfairly discriminating against a certain demographic'?

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

#34

Post by trhway »

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?

you seem to mistake market efficiency for abuse of an asymmetry. If anything, allowing abuse of an asymmetry leads to decrease in efficiency. They don't need better service if they can just extract more from you for the same service.

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

#36

Post by anonporridge »

8f2ab37a-ed6c wrote: post #32
greatpostman wrote: post #9

Earlier quoted context omitted.

Yeah, basically they make you pay to tip the odds so in your favor that you might overcome that terrible ratio I quoted

I'm actually surprised that dating apps aren't doing more with monetization opportunities. There are plenty of whales out there who would be happy to deploy their disposable income for mating opportunities. Why not let someone spend $1000 a day to be the top displayed profile in a city for an entire day?

Those people aren't using Tinder.

There are "dating" sites that specialize in connecting wealthy/successful people (mostly older men) with young, beautiful people (mostly women). They do charge quite a bit and make bank.

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

#37

Post by 8f2ab37a-ed6c »

trhway wrote: post #34
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?

you seem to mistake market efficiency for abuse of an asymmetry. If anything, allowing abuse of an asymmetry leads to decrease in efficiency. They don't need better service if they can just extract more from you for the same service.

The part I don't understand though is why this is a problem. If you think the price of the service is too high, move on to a competitor. I did once I saw how much they were going to charge me this year. Hinge/Bumble are a much better ROI at this moment, and Tinder lost a long time paying customer. That's the market at work.

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

#38

Post by gruez »

rahimnathwani wrote: post #33
hda2 wrote: post #20

Earlier quoted context omitted.

Because sex, age, and race are statistically significant factors in how much the insurance companies will pay out for each demographic. Personalized pricing for a digital service with a more-or-less constant cost-per-user doesn't make sense here (unless you want to maximize profits by unfairly discriminating against certain demographics).

Most people are fine with movie theatres charging children less than they charge adults. Is that 'unfairly discriminating against a certain demographic'?

>Is that 'unfairly discriminating against a certain demographic'?

I suspect it gets a free pass because the demographic being discriminated against is better off (eg. adults who tend to have more disposable income). If it were the other way around (eg. software companies charging elderly people more because they don't know any better), there's going to be more backlash.

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

#39

Post by robbedpeter »

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".

Products aren't priced based on value, but on the maximum a customer will pay. A free market identifies the value of a product through competition between different sellers of the product.

Tinder is entitled to charge as much as they want to whoever they want as long as they're not discriminating against a protected class.

The free market resolution requires competition, though. There might be a reasonable case to be made that products that don't have comparable competition can't be priced in a way that exploits different customers by charging more for receiving the same service or good?

I don't think there's anything comparable to tinder that found be considered legitimate competition- match.com, Madison, adult friend finder, etc are operating in very different markets with very different tools and expectations.

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

#40

Post by gruez »

wsdan wrote: post #23
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.

>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.

But some factors get a free pass whereas others don't. eg. age/sex is allowed, but race/income/education isn't (although zip codes approximate some of those, to an extent).

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