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Comment by tsjq | Hacker News Reader

overall nice interesting article. the actual "why" part is less than 5% of the content. TLDR: tight competition, highly price sensitive customers. most fuel stations have attached convenience store which brings in bigger profit margins. so they don't want to increase fuel price coz that will result in losing bigger profits from the convenience stores.

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Exactly - gasoline is a loss leader just like eggs and milk are in supermarkets.

It seems to be consistently true that people are only price sensitive on some things. People stop for gas at a place that has a good price on gas, then pay stupid prices for candy or chips. Is it because that costs less than the gas, so they optimize for saving money on gas? Is it because stations advertise the price of gas, but don't usually advertise the price of chips?

Anybody know what's going on in our brains, that this works on us?

It's probably something along the lines of: You can easily compare gas prices and many/most people (correctly) consider it a commodity. So, while they may or may not go out of their way to find a cheaper price, it often makes sense to wait for a cheaper price so long as they have margin to spare.

Whereas the chips and cold soda are something of an impulse buy. People probably don't think about the price too much. It's something they want and, if they do think about the price, they figure (probably correctly) that it won't be cheaper at the next convenience store. And, even if a supermarket is handy, they're not going to spend 20 minutes dealing with that.

wow. that's an insightful observation indeed.

does this behavior come under the "mental accounting" topic that Richard Thaler talks about ?

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