Latest news: Burning Man blames game theory for their failure to understand basic supply and demand, hugely underprices tickets, 2⁄3 of buyers left in cold, Market Economics Fairy cries.
That’s not a fair assessment of the organizers’ skill level.
They seem to have a nice firm grip on the effect of fixed supply, fixed price, and increasing demand:
And in those regards, the ticket selection system worked as planned — but it created other unforeseen problems, and most of them boil down to an unpredicted, overwhelming level of demand. The impact of that demand is beyond what we projected when designing the system; even if we knew there were destined to be some people missing out, we didn’t expect nearly so many.
What they didn’t predict was that the expectation of scarcity would further increase demand, creating a positive feedback loop. In their words:
there was a fair amount of over-registration – those who said “I need one but I’ll order two…” or “I’m not sure I’m going but I’ll get one just in case.” We can now see that some of that happened simply because the perception of scarcity drove fear and action for all of us.
So, they understand supply and demand (they just made a bad factual estimate of demand), and they didn’t really understand game theory—but after they made their mistake they publicly admitted it, asked around to see what they did wrong, and proposed strategies for mitigating the mistake.
I gather they didn’t know how huge the demand would be this year.
Burning Man’s problem might be a good topic for LW to kick around. Suppose you have pretty good abundance, how do you ration access to excellent social venues without having barriers that do damage to the venues? Is this even possible?
In this particular case, not all attendees appear to be equally valuable to the event/other attendees. Giving priority to people who’ve organized cool things in the last few years may make sense.
Yes, this was my reaction - ‘let the price float, and give transferrable vouchers to the people who do the most awesome stuff; if they object, well, that’s why the vouchers are transferrable’. It’s not much different from what they’re already suggesting, telling the lucky ones to distribute excess tickets among people they like.
I don’t understand, won’t pricing the tickets higher just cause people to be disappointed that the tickets were too expensive for them, instead of there not being enough?
It’d probably lead to a roughly equal amount of personal disappointment once the dust settles, but less disruption to the community. Major projects, the kind that the newsletter’s alluding to when it talks about collaborations, aren’t cheap; members of the camps that put them on usually spend at least their ticket price on supplies, to say nothing of labor. That implies that there’s enough loose money floating around those projects that an increase in ticket prices wouldn’t be an insurmountable hurdle.
Of course, it may very well be such a hurdle for those burners who’ve joined the event as spectators; principle of inclusion aside, though, those participants aren’t as valuable to the organization or to each other as more committed folks. If there’s concern over raising the bar too high for marginal theme camps to participate, the organizers could divert some of the excess funds into grants or reduced-price tickets for that demographic.
I get the impression that this line of thinking looks too cold-blooded for the Burning Man organizers to take to heart, though. Hence the rather strained attempt at casting the problem in terms of “Civic Responsibility” and “Communal Effort”.
It will allow people that were willing to pay the market price actually buy the tickets. If there is sufficient demand then maybe a Burning Man 2 festival makes economic sense, or increasing the supply of tickets for Burning Man itself.
We live in a world of limited resources not of good wishes. Good wishes lead to dead weight losses. I don’t see a possible scenario where price control is a good idea - LAW of supply and demand.
If there is some societal interest that the market fails to protect here (is Burning Man a fundamental right applicable to a certain type of person?) If so, then we should have a BMPA (like the EPA) formed to regulate the event.
Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries. - Ayn Rand
Latest news: Burning Man blames game theory for their failure to understand basic supply and demand, hugely underprices tickets, 2⁄3 of buyers left in cold, Market Economics Fairy cries.
That’s not a fair assessment of the organizers’ skill level.
They seem to have a nice firm grip on the effect of fixed supply, fixed price, and increasing demand:
What they didn’t predict was that the expectation of scarcity would further increase demand, creating a positive feedback loop. In their words:
So, they understand supply and demand (they just made a bad factual estimate of demand), and they didn’t really understand game theory—but after they made their mistake they publicly admitted it, asked around to see what they did wrong, and proposed strategies for mitigating the mistake.
Why are we mocking them again?
I gather they didn’t know how huge the demand would be this year.
Burning Man’s problem might be a good topic for LW to kick around. Suppose you have pretty good abundance, how do you ration access to excellent social venues without having barriers that do damage to the venues? Is this even possible?
In this particular case, not all attendees appear to be equally valuable to the event/other attendees. Giving priority to people who’ve organized cool things in the last few years may make sense.
Yes, this was my reaction - ‘let the price float, and give transferrable vouchers to the people who do the most awesome stuff; if they object, well, that’s why the vouchers are transferrable’. It’s not much different from what they’re already suggesting, telling the lucky ones to distribute excess tickets among people they like.
I don’t understand, won’t pricing the tickets higher just cause people to be disappointed that the tickets were too expensive for them, instead of there not being enough?
It’d probably lead to a roughly equal amount of personal disappointment once the dust settles, but less disruption to the community. Major projects, the kind that the newsletter’s alluding to when it talks about collaborations, aren’t cheap; members of the camps that put them on usually spend at least their ticket price on supplies, to say nothing of labor. That implies that there’s enough loose money floating around those projects that an increase in ticket prices wouldn’t be an insurmountable hurdle.
Of course, it may very well be such a hurdle for those burners who’ve joined the event as spectators; principle of inclusion aside, though, those participants aren’t as valuable to the organization or to each other as more committed folks. If there’s concern over raising the bar too high for marginal theme camps to participate, the organizers could divert some of the excess funds into grants or reduced-price tickets for that demographic.
I get the impression that this line of thinking looks too cold-blooded for the Burning Man organizers to take to heart, though. Hence the rather strained attempt at casting the problem in terms of “Civic Responsibility” and “Communal Effort”.
It will allow people that were willing to pay the market price actually buy the tickets. If there is sufficient demand then maybe a Burning Man 2 festival makes economic sense, or increasing the supply of tickets for Burning Man itself.
We live in a world of limited resources not of good wishes. Good wishes lead to dead weight losses. I don’t see a possible scenario where price control is a good idea - LAW of supply and demand.
If there is some societal interest that the market fails to protect here (is Burning Man a fundamental right applicable to a certain type of person?) If so, then we should have a BMPA (like the EPA) formed to regulate the event.
Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries. - Ayn Rand
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