Question: 1. Would a place like the Terra Bite Lounge succeed in your community? In what places might that business model work and in what places

1. Would a place like the Terra Bite Lounge succeed in your community? In what places might that business model work and in what places might it not? What payment would you give as a customer of the café? How do you feel about Tina Cooper’s philosophy?
2. Would “self-determined pricing” work for all musical artists or is Issa’s situation in some way different? What insights can you gain from the statistics the website presents? If you wanted to download an Issa song, what would you pay?
3. How do you handle baskets that ask for donations for coffee, bagels, and the like? What payment rate do you think your organization would have if Paul delivered his bagels there? Why? How would you interpret Paul’s findings from his economic experiment? Do any of his findings surprise you?
4. Taken as a whole, how do the results of these experiments with pricing shape, predict, and/ or explain how customers deal with the companies they patronize? What does it tell us about how companies deal with their customers? What general insights can you draw about people’s honesty?

When we discuss the social contract between a business and its customers, our focus tends to be on the responsibilities of business and how well or how badly a business treats its customers. Social contracts, however, are two-way relationships in which the customer also plays an active part. In this case, we focus on how well or how badly customers treat the businesses they patronize. We will examine situations in which customers are able to determine the prices they will pay and even whether they will pay at all.

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1 Information in the case and the Freakonomics text indicates that rural communities may have a better success rate than larger communities As a customer of the caf I would endeavor to make a payment ... View full answer

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