[btilly]

See http://en.wikipedia.org/wiki/Price_ceiling for a basic overview.

This stuff is literally economics 101 supply-demand curve material. When you artificially cap the price too low, you create shortages and a black market.

Economic theory says that what you should do is set up an auction where everyone says how many tickets they want to buy and the maximum price you're willing to pay. The bids are sealed so nobody knows what the price will be until the auction is finished. Sort the bids by price (breaking ties by how fast you put your order in). Everyone actually pays the highest price that anyone not getting a ticket was willing to pay.

Economics and game theory says that the stable equilibrium for this type of auction is for everyone to honestly report the maximum price they are willing to pay. If everyone does then everyone who got a ticket is either indifferent or happy about getting the ticket at that price, and everyone who did not want a ticket would indifferent to happy about not buying a ticket at that price.

Theory assumes that people's opinions about how much they would pay don't change as the event comes closer. This assumption is, of course, wrong. But I do not know of a more fair strategy than this one.

[blhack]

Everything you just said assumes that there is never a secondary market.

There is. That is the problem. Nobody cares about spending $400 for a ticket. To burners, that's a very tiny price to pay to get "home" for a week, and is a tiny fraction of the overall cost of the trip.

If we can figure out a way (like, hello, names on tickets) to make the tickets non-transferable, then figuring our a reasonable price isn't an issue at all.

--

The burning man ticket problem is logistical, not economic.

[btilly]

People who refuse to learn economics keep making the same mistakes. :-(

Nothing that I said makes any assumptions either way about the secondary market. In fact in the real world a secondary market serves a valuable purpose for people who want to go and then are unable due to unexpected circumstances (sickness, loss of income, etc). Or for people who buy an extra ticket to gift a friend, and then find that the friend you had in mind got their own ticket already. There are a lot of reasons other than being an evil speculator to want to sell a ticket on a secondary market.

But even with a secondary market, the mechanism that I describe according theory would vastly reduce scalping. If someone is willing to plan ahead and pay $1000 to be there, they are guaranteed of getting a ticket at the same price as everyone else. Of course there will always be people who fail to plan and buy at the last moment, but theory says that this pool should be much less profitable for scalpers than people who were willing to pay top dollar but got unlucky.

An additional benefit for something like Burning Man is that you get an accurate read of what your actual market is. A non-profit need not use this to maximize profits. If you could, for half again as much, get a space that is 2x as large, can you rent it and still break even? With the rich data set from the auction, you can get a much better read on whether that is feasible than with traditional ways of selling tickets.

[blhack]

The fact that you would make a blanket statement about somebody learning "economics" as if that is one skill demonstrates your level of understanding here, methinks.

--

I think you don't understand the culture at burning man, which is, or at least triest to be, completely decoupled from the concept of money. In fact, that is one of the 10 core principles.

[btilly]

The fact that you claimed that I had made assumptions that I had not in fact made demonstrates your level of understanding.

Can we dismiss the snide remarks?

I freely admit that I have never gone to burning man, nor could I possibly fit something like that into my life for many years. However that said, a better understanding of money and economics would ironically enable burning man to better set things up to create a space that is free from monetary concerns.

With the strategy that I proposed, they would be in a better position to make the event as big as it could possibly be at exactly the lowest price that breaks even. And to do it in a way that limits the ability of scalpers to take money from people who want to be at burning man, while providing freedom for people who need to change their minds to actually change their minds. (It also provides the ability to buy tickets with the purpose of gifting them to others, without having to worry about who those others might be.)

Think of it as a piece of economic judo, using economics to best produce a non-economic outcome. In some sense it is not entirely dissimilar to how a copyleft license uses copyright law to achieve a purpose that is diametrically opposite to what that law was originally intended for.

[drostie]

I am not sure that your proposal will work for anything with a concert-like structure -- much less, Burning Man.

The problem is precisely the one that anyone faces: irrationality. You're asking people to state their price of indifference several days from now. Many people will systematically under-report that, few will systematically over-report it. Scalpers can exploit this. There is also a systematic problem of forgetfulness; there will be some people who simply aren't part of the initial bid but want the product -- and scalpers can make money selling to them. Scalpers themselves are a sort of free-market force and free markets will not eliminate them.

We've already got a system which the scalpers found a way around: the normal economic voodoo which we use is, "sell tickets at the door, then scalpers can't sell at a profit any more." That works incredibly well for most events. It could perhaps be extended to arbitrary events if overselling were common practise, but I don't know how you'd soak up the hate of the people who Couldn't Get In The Door.

[blhack]

Sure we can dismiss the snide remarks. Start by retracting your implication that I refuse to learn economics.

Burning man is:

A) a nonprofit B) not a concert C) not trying to maximize their intake of money D) Attended by people from every category of the economic spectrum from Sergey and Larry to the guy saving all year for the lowest income tier of ticket.

What you're describing doesn't work for this. I'm sorry.

[blhack]

Ok.

[mst]

I think he's spot on - Burning Man seems to me to be an attempt to create an agalmic environment in the same way that open source projects are, and the use of economics/copyright as tools to mediate the agalmia's interaction with the outside world in a manner beneficial to it are the right answer here.

I'm certainly wondering if the approach would be effective for ticket sales for community conferences and similar things, since I'd much rather any extra money that could be captured went into a relevant non-profit rather than into scalpers' pockets.

[enneff]

Just curious: how would the burner community react to being forced to present ID "at the door"?

[blhack]

A large, vocal majority of them have been demanding this since last fall when the lottery was announced.

A very small also vocal minority doesn't like this. Supposedly. Somewhere.

[stonemetal]

Say the tickets are $400 as you said, then everyone who got one bid > 400 dollars everyone who didn't get one claimed the most they were willing to pay is < 400 dollars. Assuming they weren't lying were is the secondary market? You are unable to sell your ticket for more than you paid for it so the secondary market acts as loss reduction device not a money making endeavor.

[dagw]

Only if you assume peoples situation and desires are static and that their ability for forward planning is perfect and rational. I might not be that interested in going to Burning Man 6 month out, but as the date approaches and I hear about how a whole bunch of people I know will be there then all of a sudden I'm much more willing to pay.

Or at the time of the auction I'm unemployed and worried about paying rent, then I might only be able pay $100. Then three month later I'm offered a job with a great salary, and now I'm all of a sudden willing to pay $500-600.

No matter how you structure things, there will always be people whom are willing to pay more after the fact, and as long as there is a market someone will find a way to sell to the market.