Pareto improvements: a cautionary tale

I heard this week of a friend who was writing a paper on supermarket pricing. ¬†Some of the research that the shop had carried out (which, unfortunately, remains confidential) showed that people were, at times, put off buying items if they were in a buy-one-get-one-free deal. ¬†Indeed, there were a few items that actually sold worse when they were in a deal than when they were out of it, particularly when you looked at individual shopping habits – yes, those Clubcards are pretty useful from a econometrics point of view. Continue reading “Pareto improvements: a cautionary tale”