In late 1999, the Wall Street Journal reported that the Coca-Cola Company was working to develop technology that would allow its vending machines to set the price of products in based on demand, increasing prices during major events such as hot days, or reducing them when it makes sense, such as during cold weather. Say no to plagiarism. Get a Tailored Essay on “Why Violent Video Games Should Not Be Banned”?Get an Original Essay This technology could in theory be used to adjust prices on a larger scale (i.e. multiple vending machines at a time). times) or at a more granular level (i.e. on a specific machine). According to a Harvard Business School case on Coca-Cola, during a public appearance, Mr. Douglas Ivester, the company's CEO, confirmed that he was considering rolling out this pricing structure, emphasizing that "Coke- Cola is a product whose utility varies from moment to moment” and when the utility is higher, as in a stadium, “it is just that it costs more”. Ivester's comments, and the idea of ​​this technology in general, caused a stir among the general public; and in response, Coca-Cola quickly issued a press release stating that it was "not introducing vending machines that would increase the price of soft drinks in hot weather" and that the technologies being explored would "enhance their ability to deliver on their promise to offer.” products that people want at affordable prices.” Ultimately, while not necessarily directly related to this incident, it likely contributed to Ivester's departure from Coca-Cola early the following year. Economist Richard Thaler's book Misbehaving: The Making of Behavioral Economics explains that the pricing structure mentioned above, known as "dynamic pricing," is consistent with what "economic theory says will and should happen.” Illustrating this concept through the example of snow shovels following a blizzard, he explains that the price would increase "enough so that everyone who is willing to pay the price will get one", because it is "the only way to ensuring that snow shovels end up belonging to those who value them most (as measured by their willingness to pay).” However, Thaler says he has found through research that this type of price adjustment – ​​particularly companies profiting from events such as blizzards – typically angers consumers and cites Coca-Cola as a case in which a CEOs “discovered the hard way that violating fairness standards can backfire.” » In this reader's opinion, one of the areas where Ivester got it wrong was explicitly stating that this price increase was "fair." Perhaps he overestimated his understanding of how consumers think and his ability to convince the public that it was reasonable to raise prices at points of high demand. Or maybe Ivester was too confident and thought people's love for Coca-Cola would outweigh any intolerance for what some might consider price gouging. If he had considered the average consumer's point of view, Ivester might have realized that even if a soda is not essential to a person's survival, the public might think it was unfair for a company increases the price of a drink when it is very hot outside and capitalizes on consumers' thirst. Given that Coca-Cola is a popular product that has been around for over a century, it makes sense that the company would look for opportunities to raise its prices, especially for.