Wednesday, December 25, 2013

Buffet death spirals

This could be called the Sizzler problem. In the 1990s, the steak restaurant chain tried to beef up sales with an all-you-can-eat salad bar, which got bigger as it got more popular. But as more hungry customers came, the chain was forced to lower quality, which caused customers to flee, which resulted in bankruptcy.
--David Streitfeld, NYT, on adverse selection at work in buffets