What does a price tell you? Assume that you were going to
purchase a GE Advantium 120 microwave oven on Sunday, August 12.
Comparing Sears, Best Buy and Amazon’s sellers at 3 a.m., you
would have seen, respectively, $899.99, 809.99 and 744.46. At
Amazon’s website, the price changed to slightly more than $850
at 5 a.m., it dropped again to their $744.46 low several hours
later and then back above $850 at 10 p.m. During that day, Sears
kept the same price, Best Buy changed twice and Amazon, 9 times.
Call it dynamic pricing. The story of dynamic pricing begins
with airline deregulation in 1978. American Airlines (although
some say Delta) was the first to realize that different classes
of passengers were willing and able to pay different fares. Of
course they could not ask if someone was planning a vacation or
a business trip, but they could snag the business traveler by
charging more if the flight was the next day. And so began what
they called yield management. Spreading to hotels and cruises,
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