Let’s say that you saw the price of Skippy peanut butter,
Tropicana orange juice, and Quaker oatmeal went up. Would you be
concerned about inflation? In a recent paper, researchers from
Yale and the University of Chicago said it is a bit more
complicated than that. Stores, they said, were very aware that
certain consumers tended to be “loyals” while others were
“shoppers.” The “loyals” bought the same brand, no matter what.
“Shoppers,” by contrast, were bargain hunters. If Peter Pan
peanut butter were on sale, they would not only buy it (and
abandon Skippy), but they would also stock up with extra jars.
Knowing the character of their clientele, supermarkets adjusted
prices to optimize purchases from “loyals” and “shoppers.” They
made sure, for example, that sales were carefully scheduled so
that they would minimize lost revenue from their “loyals.”
Fluctuations in price, then, do not only reflect increasing
costs of production or changes in the money supply. Instead,
they might just be an example of business