Perfect Price Discrimination refers to a situation where the seller charges each consumer the highest price they are willing to pay, based on individual demand and willingness to pay. In a perfect price discrimination scenario, the seller maximizes their profits and captures all consumer surplus, as each consumer purchases the amount corresponding to their maximum marginal utility.

The benefits of perfect price discrimination lie in its ability to maximize seller revenue and improve market efficiency. Under perfect price discrimination, the seller can match prices to consumers' demands and income levels without wasting resources or incurring unnecessary costs. Furthermore, perfect price discrimination can reduce or eliminate economic disparities between consumers, thereby increasing social welfare.

However, in practice, perfect price discrimination is difficult to achieve because it typically requires the seller to have access to a large amount of personal information about consumers, and it necessitates that consumers cannot collaborate or communicate to lower prices. Additionally, governments may regulate or intervene in perfect price discrimination to protect consumer rights and promote competition.

In general, the highest psychological price a consumer is willing to pay for a product is determined by three factors:

• The consumer's demand intensity for the product
• The consumer's financial capacity
• The consumer's assessment of the product's quality

Clearly, in normal business operations, obtaining even one of these pieces of information is difficult, let alone all three. To achieve perfect price discrimination, all three factors must be determined. So, how can a product be priced to achieve perfect price discrimination?

Generally speaking, there are two major principles for decision-making:

• Let the person with the most information make the decision
• Make the decision at the moment when the most information is available

Therefore, the optimal solution is: Allow consumers to set the price for the product themselves after they have used it. This creates two main challenges:

• How can we allow consumers to use the product without concerns or risks?
• How can we ensure consumers honestly set the price?

The P.I.V.O.T. Protocol can precisely address these two challenges.

Brand and Positive Reviews

Decoupling: Usage, Evaluation, and Payment

<aside> 💡 Since only direct users (developers, valuers, and users) have information symmetry, while non-users face information asymmetry, the P.I.V.O.T. protocol prohibits non-direct users from participating.

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