Online Learning And Pricing For Multiple Products With Reference Price Effects
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Online Learning And Pricing For Multiple Products With Reference Price Effects
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Author : Sheng Ji
language : en
Publisher:
Release Date : 2023
Online Learning And Pricing For Multiple Products With Reference Price Effects written by Sheng Ji and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023 with categories.
We consider the dynamic pricing problem of a monopolist seller who sells a set of mutually substitutable products over a finite time horizon. Customer demand is sensitive to the price of each individual product and the reference price which is formed from a comparison among the prices of all products. To maximize the total expected profit, the seller needs to determine the selling price of each product and also selects a reference product (to be displayed) that affects the consumer's reference price. However, the seller initially knows neither the demand function nor the customer's reference price, but can learn them from past observations on the fly. As such, the seller faces the classical trade-off between exploration (learning the demand function and reference price) and exploitation (using what has been learned thus far to maximize revenue). We propose a dynamic learning-and-pricing algorithm that integrates iterative least squares estimation and bandit control techniques in a seamless fashion. We show that the cumulative regret, i.e., the expected revenue loss caused by not using the optimal policy over $T$ periods, is upper bounded by $O((n^2+n) sqrt{T} log T)$, which is optimal up to a logarithmic factor in terms of the time horizon $T$ and polynomially scaling with the number of products $n$. We also establish the regret lower bound (for any learning policies) to be $ Omega(n^{1.5} sqrt{T})$. We then generalize our analysis to a more general demand model. Finally, our algorithm performs consistently well numerically, outperforming an exploration-exploitation benchmark. We also identify an interesting ``loss-leader'' phenomenon in our computational study.
Multi Product Dynamic Pricing With Reference Effects Under Logit Demand
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Author : Mengzi Amy Guo
language : en
Publisher:
Release Date : 2022
Multi Product Dynamic Pricing With Reference Effects Under Logit Demand written by Mengzi Amy Guo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
We consider an infinite-horizon multi-product dynamic pricing problem with reference effects in a monopolistic setting, where the reference price is an exponentially weighted average of historical prices. In each period, the demand follows the multinomial logit (MNL) model, where the utility depends on both the current price and the reference price, and consumers can have product-differentiated sensitivities to the price and the reference price. We conduct thorough analyses of the myopic pricing policy, including its solution, long-run convergence behavior, and performance guarantee compared to the long-term discounted revenue of the optimal pricing policy. Furthermore, we establish the structural properties of the optimal pricing policy. When consumers are loss-neutral towards all products, we explicitly characterize the optimal pricing policy if it converges to a steady state, and based on our characterization we show that the steady state price can be computed efficiently by a binary search. Interestingly, we find that such a convergence behavior of the optimal pricing policy heavily relies on the upper bound of the admissible price range, and a low price upper bound facilitates the policy to converge. In contrast, when consumers are gain-seeking towards all products, we prove that the optimal pricing policy admits no steady state regardless of the price range. Nevertheless, if consumers are only gain-seeking towards certain but not all products, the optimal pricing policy can potentially be convergent. In addition, our numerical experiments show that loss-aversion over all products does not rule out price fluctuations. This finding is at odds with the classic belief on loss-averse consumers and hence, highlights the significance of accounting for cross-product effects through the MNL demand.
Behavioral Consequences Of Dynamic Pricing
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Author : David Prakash
language : en
Publisher: BoD – Books on Demand
Release Date : 2022-08-19
Behavioral Consequences Of Dynamic Pricing written by David Prakash and has been published by BoD – Books on Demand this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-08-19 with Business & Economics categories.
Digital technologies are driving the application of dynamic pricing. Today, this pricing strategy is used not only for perishable products such as flights or hotel rooms, but for almost any product or service category. With dynamic pricing, retailers frequently adjust their prices over time to respond to factors such as demand, their supply and that of competitors, or the time of sale. Additionally, dynamic pricing allows retailers to take advantage of a large share of consumers' willingness to pay while avoiding losses from unsold products. Ultimately, this can lead to an increase in revenue and profit. However, the application of dynamic pricing comes with great challenges. In addition to the technological implementation, companies have to take into account that dynamic pricing can cause complex and unintended behavioral consequences on the consumer side. The key objective of this dissertation is to provide a deeper understanding of the impact of dynamic pricing on consumer behavior. To this end, this dissertation presents insights from four perspectives. First, how reference prices as a critical component in purchase decisions are operationalized. Second, how customers search for products priced dynamically, differentiated by business and private customers, as well as by different devices used for the search. Third, whether and how dynamic pricing influences the impact of internal reference prices on purchase decisions. Finally, this dissertation demonstrates that consumers perceive price changes as personalized in different purchase contexts, leading to reduced perceptions of fairness and undesirable behavioral consequences.
Dynamic Pricing With Reference Price Effects
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Author :
language : en
Publisher:
Release Date : 2015
Dynamic Pricing With Reference Price Effects written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Dynamic Pricing With Demand Learning And Reference Effects
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Author : Arnoud den Boer
language : en
Publisher:
Release Date : 2020
Dynamic Pricing With Demand Learning And Reference Effects written by Arnoud den Boer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
We consider a seller's dynamic pricing problem with demand learning and reference effects. We first study the case where customers are loss-averse: they have a reference price that can vary over time, and the demand reduction when the selling price exceeds the reference price dominates the demand increase when the selling price falls behind the reference price by the same amount. Thus, the expected demand as a function of price has a time-varying "kink" and is not differentiable everywhere. The seller neither knows the underlying demand function nor observes the time-varying reference prices. In this setting, we design and analyze a policy that (i) changes the selling price very slowly to control the evolution of the reference price, and (ii) gradually accumulates sales data to balance the tradeoff between learning and earning. We prove that, under a variety of reference-price updating mechanisms, our policy is asymptotically optimal; i.e., its T-period revenue loss relative to a clairvoyant who knows the demand function and the reference-price updating mechanism grows at the smallest possible rate in T. We also extend our analysis to the case of a fixed reference price, and show how reference effects increase the complexity of dynamic pricing with demand learning in this case. Moreover, we study the case where customers are gain-seeking and design asymptotically optimal policies for this case. Finally, we design and analyze an asymptotically optimal statistical test for detecting whether customers are loss-averse or gain-seeking.
Operations Research Proceedings 2021
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Author : Norbert Trautmann
language : en
Publisher: Springer Nature
Release Date : 2022-08-29
Operations Research Proceedings 2021 written by Norbert Trautmann and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-08-29 with Business & Economics categories.
This book gathers a selection of peer-reviewed papers presented at the International Conference on Operations Research (OR 2021), which was hosted online by the University of Bern from August 31 to September 3, 2021, and was jointly organized by the Operations Research Societies of Switzerland (SVOR/ASRO), Germany (GOR e.V.), and Austria (ÖGOR). The respective papers discuss classical mathematical optimization, statistics and simulation techniques. These are complemented by computer science methods, and by tools for processing data, designing and implementing information systems. The book also examines recent advances in information technology, which allow massive volumes of data to be processed and enable real-time predictive and prescriptive business analytics to drive decisions and actions. Lastly, it presents a selection of problems that are modeled and treated while taking into account uncertainty, risk management, behavioral issues, etc.
Operations Research And Enterprise Systems
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Author : Greg H. Parlier
language : en
Publisher: Springer
Release Date : 2019-03-14
Operations Research And Enterprise Systems written by Greg H. Parlier and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-14 with Computers categories.
This book constitutes revised selected papers from the 7th International Conference on Operations Research and Enterprise Systems, ICORES 2018, held in Funchal, Madeira, Portugal, in January 2018. The 12 papers presented in this volume were carefully reviewed and selected from a total of 59 submissions. They are organized in topical sections named: methodologies and technologies; and applications.
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Author :
language : en
Publisher: Cengage AU
Release Date :
written by and has been published by Cengage AU this book supported file pdf, txt, epub, kindle and other format this book has been release on with categories.
Competitive Multi Product Pricing With Demand Learning And Substitution Effects
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Author : Rainer Schlosser
language : en
Publisher:
Release Date : 2016
Competitive Multi Product Pricing With Demand Learning And Substitution Effects written by Rainer Schlosser and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Many firms are selling different types of products. Typically sales applications are characterized by competitive settings, limited information and substitution effects. The demand intensities of single types of products are affected by the own products as well as the products of competitors. Due to the complexity of such markets, smart pricing strategies are hard to derive. We analyze stochastic dynamic multi-product pricing models under competition for the sale of durable goods. In a first step, a data-driven approach is used to measure substitution effects and to estimate sales probabilities in competitive markets. In a second step, we use a dynamic model to compute powerful heuristic feedback pricing strategies, which are even applicable if the number of competitors' offers is large and their pricing strategies are unknown. Moreover, our approach allows taking additional features, such as customer ratings or shipping times into account. Adaptive estimations are used to update the estimation of sales probabilities and to further improve the strategy.
Consumer Behaviour Asia Pacific Edition
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Author : Wayne D. Hoyer
language : en
Publisher: Cengage AU
Release Date : 2017-01-01
Consumer Behaviour Asia Pacific Edition written by Wayne D. Hoyer and has been published by Cengage AU this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-01-01 with Consumer behavior categories.
Cutting edge and relevant to the local context, this first Australia and New Zealand edition of Hoyer, Consumer Behaviour, covers the latest research from the academic field of consumer behaviour. The text explores new examples of consumer behaviour using case studies, advertisements and brands from Australia and the Asia-Pacific region. The authors recognise the critical links to areas such as marketing, public policy and ethics, as well as covering the importance of online consumer behaviour with significant content on how social media and smartphones are changing the way marketers understand consumers. * Students grasp the big picture and see how the chapters and topics relate to each other by reviewing detailed concept maps * Marketing Implications boxes examine how theoretical concepts have been used in practice, and challenge students to think about how marketing decisions impact consumers * Considerations boxes require students to think deeply about technological, research, cultural and international factors to consider in relation to the contemporary consumer * Opening vignettes and end-of-chapter cases give students real-world insights into, and opportunities to analyse consumer behaviour, with extensive Australian and international examples providing issues in context