Customers pay what and when they like, or not at all — it makes no difference to the cafe employees, who are instructed not to peek when people put money in the metal lock box.Link (via Freakonomics Blog). If Terra Bite wants to subtly enforce payment—and apparently they really don't—they might want to consider posting a picture of eyes above the honesty box.
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So far, Terra Bite has served up to 80 customers per day, averaging about $3 per transaction, he said. When the shop brings in a steady flow of 100 customers a day, Peretz figures, he will more than break even.
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Even without posted prices, "social monitoring" — the feeling that others are watching what you do — can enforce payment, said Erica Okada, assistant professor of marketing at the University of Washington Business School.
With its anonymous drop box, Terra Bite has minimized, if not eliminated, that effect. Under these circumstances, Okada said, the economic model predicts that Terra Bite customers won't pay anything.
But they do.
Indexed by tags business, sociology, economics, psychology, social monitoring, Terra Bite, coffee, Kirkland.