[bb88]

> Higher prices often discourage people from over-buying an item.

Sure if prices are stable. But prices lie on a curve over time. And because prices are on a curve, the price itself is not what the market sees, but instead the curve of the change in price over time.

Price hikes cause FOMO. If you need something, and you're worried about the price going up, you're going to buy it now. This has most commonly happened with gasoline. During 9/11, the government had to tell gas stations, e.g., to not hike their prices, because that would cause even more panic -- there was no supply shortage.

The second aspect is those that can afford the risk see the sudden spike as an investment opportunity. One of our neighbors in the development used it to buy toilet paper and sell it at $5/roll. They're expecting the price to continue to rise. This is not much different than buying stock when the price of a stock is rising.

So yes, in if a market is rational and prices are stable (but high), then you're right. But lately, price spikes seem to be causing fear -- which, btw, people seem to like to game.

(Edited for clarity)