How shadowprice.com works.

shadowprice.com

a customer retention science tool.

Okay, you have my attention - now tell me how it works.

Shadowprice.com uses a rule-based metric for survival risk – batting average. In each game of a series, our simulator computes or updates batting averages for the player and lowest-cost-of-supply (LCOS) challenger. A competitor gets a hit (from 2 at bats) if end-of-year market share equals or exceeds 1/9th, or share of positive annual market profit equals or exceeds 1/9th while end-of-year market share equals or exceeds 1/18th. Two hits reward market share and positive profit that each equals or exceeds 1/9th. Joint actions (e.g., mergers) require performance multiples.

Hence, our rules reward performance that equals or exceeds winning by lottery, except that survival is more important than making money. The picture shows this.

battingaverage

Inequalities are 1/9th, multiples, or fractions of 1/9th because there are 9 competitors in our simulated market.

This means that shadowprice.com measures your and the LCOS's preference for wealth versus life as being lexicographic. Surviving the year in this market requires customers, regardless of gains or losses on the balance sheet. You might ask yourself, "Would I rather be alive at the end of the day or a millionaire?" Batting average computational rules impose the same logic on entrants in a service class of a newly deregulated market.

Is your interest piqued? Then it's time to get into the details of shadowprice.com.

We recommend:

learning about Autopilot 3.6, which you can buy now on a 4 gigabyte memory stick that includes audiovisual presentations giving advice and opinions.
viewing our helpful diagram for visual insight into how shadowprice.com works.
once you've done that, downloading and reading a comprehensive overview of the game.
once you've done that, downloading Autopilot 3.6 pure and simple, and giving it your best shot without advice and opinions presented on the memory stick.

Why shadowprice.com?

According to the late Nobel Laureate John R. Hicks in Value and Capital, shadow prices are determined by equilibrium conditions. Robert Dorfman, and Nobel Laureates Paul A. Samuelson and Robert M. Solow in Linear Programming and Economic Analysis define shadow prices as the economic rent owed to productive factors, derived as the dual solution to a linear programming problem. Michael D. Intriligator in Mathematical Optimization and Economic Theory defines shadow price as a Lagrange multiplier measuring the sensitivity of a value to changes in a quantity.

shadowprice.com looks at shadow prices in two ways related to market power and imperfect information. In terms of (one particular manifestation of) market power, Monte Carlo solution shadow prices measure the sensitivity of an efficient or nearly efficient competitive market to power vested in the intransigence of an incumbent and its customers, and to power vested in service providers to reduce competition through merger anticipating behaviors. In terms of imperfect information, shadowprice.com measures losses and gains in household consumer and service provider producer surplus, in price peace and price wars, owing to service providers acting on the basis of the assumed behaviors of other service providers. In other words that capture both concepts, shadowprice.com takes a modern view of shadow price that distinguishes between a market that optimizes (or nearly optimizes) benefit to households and service providers, and the imperfectly informed market that actually exists.

shadowprice.com is not a dotcom in the E-Commerce sense often associated with the Internet bubble. Dan Hamblin named the URL shadowprice.com to market his simulation tool and game, because shadow prices and what they represent have played a significant role in his answers to technology and policy questions during his professional career.