> Paying more does not mean higher quality.

Exactly! It is actually hard to estimate the quality of a product. And when you can't, most of the time you go for the cheaper one (unless money doesn't matter much for you).

Or you use brand as a proxy for quality and buy the Apple one without actually knowing why or how it’s “better”

In which case you obviously care about quality. That's all I'm saying: people do care about quality.

Getting the cheapest product always means worse quality. The biggest jump in cost/benefit is between the cheapest product and the second cheapest. So if you only care about price, you should always get the second cheapest product, which will almost guarantee at least 50% better quality than the cheapest. After that, the ratio is diminishing.

> Getting the cheapest product always means worse quality.

Not true. New entrants to markets often will price to undercut markets (see Uber and Airbnb in their early days). Also loss leaders are a very much a thing.

Over time markets do typically stabilize and this could be true.

The cheapest accommodation will usually not be listed on AirBnB or Booking, because of severe short-comings meaning the platform won't do business with them for any price.

As for Uber, I guess you're right in many regions. But there's a plethora of Uber competitors around the world, offering a worse experience for a cheaper price.

In 100% of cases, the cheapest product you can find will be of significantly worse quality than the second cheapest product, without bringing much savings. The rest is edge cases.

As you pointed out, I'm talking about reasonably mature markets.

In my country, studies regularly show that the cheapest toothpaste or shampoo (and other similar products) are some of the best. I would consider that mature.

I think it's an interesting heuristic, though.