New California Law about Junk Fees and its Impact on Restaurant Prices

I read through all the posts in this thread and this is a very silly misreading. Nobody is calling people with different opinions on the fees who are actually participating in discourse on that topic stupid. The point is about the stupidity of many consumers in the way that they supposedly respond differently in the market depending on whether the sticker price on each menu item reflects the true cost of the meal. That’s a point about behavioral economics, not about people who don’t agree with them.

(Those in this thread who appear to be pro-junk-fee because they believe in this effect are most likely empirically correct but also normatively wrong. I think it is pretty likely that junk fees end up slightly boosting restaurant demand by making prices look cheaper on the surface, but that’s not a reason to have them - restaurants are using them to exploit information gaps in the same way as a more egregious scammer would, and should be made to stop.)

2 Likes

well said, and couldn’t agree more. that one can exploit a deficiency in consumer psychology when it comes to behavioral pricing, does not mean that one should. it’s essentially a form of bait and switch. one of the more egregious examples of this i observed recently when checking lodging rates a luxury establishment. the cheapest room i could find was

pretty steep, but if this were in my budget, i would find on the next page

restaurants are just copying the resort-fee model. it’s the outrage over resort fees that i believe was the impetus for this legislation.

1 Like

Yes.

And i think the psychological debate is whether people dislike uncertainty more than certainly high.

My chips are on people disliking uncertainty more, so i believe junk fees are starting to hurt the restaurant industry and we should ban them.

I dont think of either consumer behavior as dumb. Different people dislike different things. The price for the meal is likely unchanged, if a restaurant could bring down prices it would.

1 Like