Download or read book Dynamic Personalized Pricing with Active Consumers written by and published by . This book was released on 2021 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Behavioral Consequences of Dynamic Pricing written by David Prakash and published by BoD – Books on Demand. This book was released on 2022-08-19 with total page 155 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Personalised Pricing A comprehensive and critical examination of first degree price discrimination written by and published by GRIN Verlag. This book was released on 2021-07-09 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Academic Paper from the year 2020 in the subject Business economics - General, grade: 72/100 (First Class Honours), Trinity College Dublin, language: English, abstract: This essay is about pricing, a core area of marketing. More specifically, it is about personalised pricing, which must not be confused with dynamic pricing. Personalised pricing describes adjusting the price for every single customer individually, while dynamic pricing describes adjusting the price for all customers subject to external factors like the current demand as of this moment, for example. If an airline company for instance lifts prices on weekends because demand is stronger on weekends in general, this is dynamic pricing. If the airline company however increases the price only for one particular customer, because they find out, for instance, that the customer uses a certain computer type which makes him likely to be wealthier than other customers, this is personalised pricing. The underlying motivation of this essay is to critically assess how personalised pricing is carried out and whether it should be adopted. Therefore, this essay takes the following approach and structure. Firstly, it is examined whether personalised pricing is legally permitted. Only if it is legally permitted to personalise prices it is worthwhile to further investigate this topic. Secondly, the customer’s willingness to pay is analysed. In order to personalise prices, it is necessary to know a customer’s exact willingness to pay. Thirdly, the topic of price elasticity is elaborated. It is necessary to assess whether profit is increased via increasing prices or decreasing prices and therefore higher demand. Fourthly, resulting retaliation as a consequence is explored. It is critically examined whether personalised pricing should be adopted, and empirical evidence is gathered to determine a retribution effect of personalised pricing which might end up making this practice unprofitable.

Download or read book Privacy Preserving Dynamic Personalized Pricing with Demand Learning written by Chen, Xi and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Competitive Personalized Pricing written by Zhijun Chen and published by . This book was released on 2018 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a duopoly model where each firm chooses personalized prices for its targeted consumers, who can be active or passive in identity management. Active consumers can bypass price discrimination and have access to the price offered to non-targeted consumers, which passive consumers cannot. When all consumers are passive, personalized pricing leads to intense competition and total industry profit lower than that under the Hoteling equilibrium. But market is always fully covered. Active consumers raise the firm's cost of serving non-targeted consumers, which softens competition. When firms have sufficiently large and non-overlapping target segments, active consumers enable firms to extract full surplus from their targeted consumers through perfect price discrimination. With active consumers, firms also choose not to serve the entire market when the commonly non-targeted market segment is small. Thus active identity management can lead to lower consumer surplus and lower social welfare. We also discuss the regulatory implications for the use of consumer information by firms as well as the implications for management.

Download or read book Is Your Price Personalized Alleviating Customer Concerns with Inventory Availability Information written by Arian Aflaki and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Extant literature has shown that personalized pricing (PP), i.e., customizing prices for individual customers, can benefit firms and some customers. However, customer concerns about being targeted by such practices have raised debates on PP tactics. Using a Bayesian persuasion framework, we study whether and under what conditions price can signal such PP implementation to customers. We also investigate whether disclosing inventory availability information can alleviate customer concerns and benefit the stakeholders, including the firm and customers. We consider a dynamic personalized pricing and information provisioning game between a firm and a market of heterogeneous customers. In the first period, the firm sets the price to learn the customer valuations and maximize revenue. In the second period, the firm may implement PP using customer purchase history. Customers are uncertain about the inventory availability and implementation of PP. Therefore, they may not precisely identify whether their purchase history will be used for pricing. However, they update their beliefs about the possibility of PP upon receiving new information. We first study myopic customers who only consider their immediate utility when purchasing. We then transition to strategic customers who take their future utility into account. We show that price alone cannot always signal PP, hurting the firm and customers. We establish conditions under which a binary inventory signal--where the firm marks the inventory as scarce when it is less than a threshold--increases the firm revenue and benefits customers. Thus, firms can create transparency over their pricing strategies by disclosing inventory availability information.

Download or read book Personalized Pricing with Imperfect Customer Recognition written by Stefano Colombo and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider a duopoly model where firms can identify only a share of consumers, which is positively correlated with the consumer' preferences. Firms charge personalized prices to the consumers they can recognize and a uniform price to the rest of consumers. The firms' available information is given by the combination of two factors: the intensive margin, which determines the share of consumers the firms can recognize in each single location, and the extensive margin, which determines how many locations the firms can identify. Different market configurations emerge according to the size of these margins. We characterize the values of the intensive and extensive margins that maximize firms' profits, and we show that profits are non-monotonic. We also show that the composition, in addition to the size, of the available information - i.e., the mix of these margins - affects firms' profits significantly. Implications for regulatory policies concerning the protection of consumers' information are finally discussed.

Download or read book Personalized Pricing and Consumer Welfare written by Jean-Pierre Dubé and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the welfare implications of personalized pricing, an extreme form of third-degree price discrimination implemented with machine learning for a large, digital firm. Using data from a unique randomized controlled pricing field experiment we train a demand model and conduct inference about the effects of personalized pricing on firm and consumer surplus. In a second experiment, we validate our predictions in the field. The initial experiment reveals unexercised market power that allows the firm to raise its price optimally, generating a 55% increase in profits. Personalized pricing improves the firm's expected posterior profits by an additional 19%, relative to the optimized uniform price, and by 86%, relative to the firm's unoptimized status quo price. Turning to welfare effects on the demand side, total consumer surplus declines 23% under personalized pricing relative to uniform pricing, and 47% relative to the firm's unoptimized status quo price. However, over 60% of consumers benefit from lower prices under personalization and total welfare can increase under standard inequity-averse welfare functions. Simulations with our demand estimates reveal a non-monotonic relationship between the granularity of the segmentation data and the total consumer surplus under personalization. These findings indicate a need for caution in the current public policy debate regarding data privacy and personalized pricing insofar as some data restrictions may not per se improve consumer welfare.

Download or read book Behavior based Personalized Pricing when Firms Can Share Customer Information written by Chongwoo Choe and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We study a model of behavior-based price discrimination where firms can agree to share customer information that can be used for personalized pricing. We show that firms are better off sharing customer information as it softens up-front competition when they gather information, consumers are worse off as a result, but total surplus can increase thanks to the improved quality of matching between firms and consumers.

Download or read book A Primal dual Learning Algorithm for Personalized Dynamic Pricing with an Inventory Constraint written by Ningyuan Chen and published by . This book was released on 2020 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider the problem of a firm seeking to use personalized pricing to sell an exogenously given stock of a product over a finite selling horizon to different consumer types. We assume that the type of an arriving consumer can be observed but the demand function associated with each type is initially unknown. The firm sets personalized prices dynamically for each type and attempts to maximize the revenue over the season. We provide a learning algorithm that is near-optimal when the demand and capacity scale in proportion. The algorithm utilizes the primal-dual formulation of the problem and learns the dual optimal solution explicitly. It allows the algorithm to overcome the curse of dimensionality (the rate of regret is independent of the number of types) and sheds light on novel algorithmic designs for learning problems with resource constraints.

Download or read book Consumer Viewpoint on Personalized Pricing written by Sr Sarmento and published by Publishers. This book was released on 2023-05-10 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Consumer Viewpoint on Personalized Pricing" is a thought-provoking book authored by Sr Sarmento. The book explores the complex issue of personalized pricing, where companies tailor prices based on consumer data such as their browsing history, demographics, and purchase behavior. The book provides a comprehensive analysis of this controversial practice, its implications on consumer behavior, and the ethical considerations surrounding it. The book starts by defining personalized pricing and discussing its evolution from traditional pricing methods. It then delves into the various forms of personalized pricing, such as dynamic pricing, surge pricing, and discriminatory pricing. The author discusses the pros and cons of each type and how they affect consumers' purchasing decisions. The book then addresses the ethical concerns surrounding personalized pricing. The author argues that companies must ensure that personalized pricing is fair and transparent, and consumers should have the right to access their data and control how it's used. The book also explores the potential for personalized pricing to exacerbate existing social inequalities, such as discriminating against low-income consumers or marginalized groups. Throughout the book, the author presents various real-life examples of personalized pricing and how consumers have responded to them. The author also discusses how technology has made personalized pricing more prevalent and sophisticated, raising questions about privacy and data protection. In conclusion, "Consumer Viewpoint on Personalized Pricing" is a must-read book for anyone interested in the intersection of business, technology, and ethics. The author's writing is engaging and accessible, making it suitable for both academics and the general public. The book provides a balanced view of personalized pricing, acknowledging its potential benefits while also highlighting the need for transparency and fairness. Overall, it's an insightful and thought-provoking read that will leave readers questioning the impact of personalized pricing on our society.

Download or read book Personalized Pricing when Consumers Can Purchase Multiple Items written by Qiuyu Lu and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We discuss the effect of personalized pricing on profits and welfare in a Hotelling model in which consumers can simultaneously purchase from both firms. As the additional gain from the second purchase increases, personalized pricing is more likely to harm (resp., benefit) consumers (resp., firms). If the additional gain is interme- diate, personalized pricing improves consumer welfare and firms' profits, contrasting with the standard result: personalized pricing benefits consumers but harms firms. When firms can choose one of the pricing policies: uniform or personalized, both choose uniform (resp., personalized) pricing under some parameters (resp., in any case); multiple equilibria can co-exist.

Download or read book Discreet Personalized Pricing written by Benjamin Reed Shiller and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Emerging tracking data allow precise predictions of individuals' reservation values. However, firms are reluctant to conspicuously implement personalized pricing because of concerns about consumer and regulatory reprisals. This paper proposes and applies a method which disguises personalized pricing as dynamic pricing. Specifically, a firm can sometimes tailor the "posted" price for the arriving consumer but privately commits to change price infrequently. Note such pricing may unintentionally arise through algorithmic pricing. I examine outcomes in four contexts: one empirical and three hypothetical distributions of consumer valuations. I find that this strategy is most intense and raises profits most for medium popularity products. Furthermore, improvements in the precision of individual-level demand estimates raise the range of popularities this strategy can be profitably applied to. I conclude that this is an auspicious strategy for online platforms, if not already secretly in use.

Download or read book Dynamic Pricing with Fairness Constraints written by Maxime C. Cohen and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the increasing popularity of personalized pricing, there is a growing concern from customers and policy makers regarding fairness considerations. This paper studies the problem of dynamic pricing with unknown demand under two types of fairness constraints: price fairness and demand fairness. For price fairness, the retailer is required to (i) set similar prices for different customer groups (called group fairness) and (ii) ensure that the prices over time for each customer group are relatively stable (called time fairness). We propose an algorithm based on an infrequently-changed upper-confidence-bound (UCB) method, which is proved to yield a near-optimal regret performance. In particular, we show that imposing group fairness does not affect the demand learning problem, in contrast to imposing time fairness. On the flip side, we show that imposing time fairness does not impact the clairvoyant optimal revenue, in contrast to imposing group fairness. For demand fairness, the retailer is required to satisfy that the resulting demand from different customer groups is relatively similar (e.g., the retailer offers a lower price to students to increase their demand to a similar level as non-students). In this case, we design an algorithm adapted from a primal-dual learning framework and prove that our algorithm also achieves a near-optimal performance.

Download or read book A Blessing Or a Curse The Implications of Consumers Aversion on Personalized Pricing written by Xin Zhang and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The proliferation of consumer data and advanced data analytics techniques (e.g., machine learning), has empowered firms to implement personalized pricing by learning individual consumer preferences. Behavioral research and anecdotal evidence suggest that consumers exhibit aversion to such a pricing practice for various reasons, such as fear of price fraud, perceived violation of social norms, unfairness, privacy concerns, etc. However, little research has examined how consumers' aversion, which inflicts a disutility on consumers, influences the impact of personalized pricing on firms and consumers in a competitive setting. Using a game-theoretic model, we investigate the effect of consumers' aversion when competing firms use personalized pricing in a market where firms have differing extents of information access to different consumer segments (i.e., different consumer addressability). Interestingly, our result shows that personalized pricing does not necessarily hurt consumers even we consider consumers are averse to it. Contrary to conventional wisdom, firms' profits from conducting personalized pricing may increase with consumers' aversion level, whereas consumer surplus decreases. The driving force is that a high aversion level enables firms to poach exclusive target consumers of the rival firm at a high uniform price. Finally, when consumers' aversion is not very high, greater exclusive access to consumer data can work against the firms. Our findings provide implications for managers on using consumer data for personalized pricing and add to policy debates on how personalized pricing could affect consumer interests.

Download or read book Personalized Pricing and Quality Customization written by Anindya Ghose and published by . This book was released on 2008 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: We embed the principal-agent model in a model of spatial differentiation with correlated consumer preferences to investigate the competitive implications of personalized pricing and quality allocation (PPQ), whereby duopoly firms charge different prices and offer different qualities to different consumers, based on their willingness-to-pay. Our model sheds light on the equilibrium product-line pricing and quality schedules offered by firms, given that none, one, or both firms implement PPQ. The adoption of PPQ has three effects in our model: it enables firms to extract higher rents from loyal customers, intensifies price competition for non-loyal customers, and eliminates cannibalization from customer self-selection. Contrary to prior literature on one-to-one marketing and price discrimination, we show that even symmetric firms can avoid the well-known Prisoner's Dilemma problem when they engage in personalized pricing and quality customization. When both firms have PPQ, consumer surplus is non-monotonic in valuations such that some low valuation consumers get higher surplus than high valuation consumers. The adoption of PPQ can reduce information asymmetry, and therefore sellers offer higher quality products after the adoption of PPQ. Overall, we find that while the simultaneous adoption of PPQ generally improves total social welfare and firm profits, it decreases total consumer surplus.

Download or read book Dynamic Pricing in Online Business What Pricing Strategy Should Be Used in Digital Business written by and published by GRIN Verlag. This book was released on 2018-09-06 with total page 147 pages. Available in PDF, EPUB and Kindle. Book excerpt: 40% of German companies vary their prices dynamically on the internet. This strategic tool helps them to exploit the consumer's maximum willingness to pay. Studies confirm that these companies are able to reach higher profits through dynamic pricing. But the federal ministry of consumer protection sees the price transparency for consumers at risk. This publication shows how new and existing customers react to dynamic pricing techniques. It examines if regular customers have a different price fairness perception than new customers. Customers often react with dissatisfaction and complaining when they notice a disadvantage due to dynamic pricing. Their dissatisfaction can have a long-term impact on the buyer-seller relationship as well as the company's reputation and profits. Therefore, price fairness perception is crucial for dynamic pricing strategies. Keywords: - Dynamic Pricing; - Status-based Dynamic Pricing; - Consumer Dissatisfaction; - Price Transparency; - New Customers; - Regular Customers