Article
Engineering, Industrial
Meng Wu, Yun Ran, Stuart X. Zhu
Summary: This research explores the impact of consumer's strategic buying behavior on pricing strategy and identifies the optimal pricing strategy through comparing profits. High-low pricing is only suitable when the offered markdown discount is relatively small. If strategic consumers are few and require a large discount, retailers can ignore strategic buying behavior and sell products at a fixed price.
INTERNATIONAL JOURNAL OF PRODUCTION ECONOMICS
(2022)
Article
Engineering, Manufacturing
Rui Zheng, Biying Shou, Yingju Chen
Summary: This study examines a monopolistic seller's optimal differential pricing problem in social networks with strategic consumers. The study finds that different network structures lead to substantially different pricing strategies, with increasing pricing strategy being optimal when the network externality effect is lower than a threshold. The study also reveals that the imbalance of influence, degree heterogeneity, and network topology impact the optimal pricing policy and profit, emphasizing the importance of considering consumer network structures in pricing decisions.
PRODUCTION AND OPERATIONS MANAGEMENT
(2023)
Article
Business
Ying Tian, Yao Zhang
Summary: Online reviews have a significant impact on entrepreneurs' pricing strategies and profit maximization, with the funding goal influencing the optimal pricing strategy, particularly in the presence of online reviews.
ELECTRONIC COMMERCE RESEARCH AND APPLICATIONS
(2022)
Article
Management
Yingdan Zhang, Ruina Yang, Zelong Yi, Shiqing Yao, Yiheng Jing
Summary: With behavior-based pricing, retailers use purchase records to differentiate prices between new and past customers. This study examines the impact of behavior-based pricing on retailers' profits in the presence of asymmetric sales channels. The findings provide insights into the profitability of behavior-based pricing for retailers and the role of purchasing convenience in pricing decisions.
OMEGA-INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE
(2023)
Article
Management
Amir Farshbaf-Geranmayeh, Georges Zaccour
Summary: This study investigated pricing and advertising decisions in a supply chain with myopic and strategic consumers. The manufacturer sets wholesale prices and shares in the retailer's advertising costs, while the retailer determines retail prices and advertising budgets. The research found that endogenously determining pricing policies and discount depths during the selling season can optimize profits.
OMEGA-INTERNATIONAL JOURNAL OF MANAGEMENT SCIENCE
(2021)
Article
Business
Peng He, Yong He, Li Zhou
Summary: This paper examines the selling strategies of a dual-channel firm in the presence of strategic consumer behavior. It investigates four different channel structures and suggests that the firm should use preannounced pricing strategy and adopt Channel CB to counter strategic consumers effectively.
JOURNAL OF RETAILING AND CONSUMER SERVICES
(2023)
Article
Business
Alisa Keller, Mila Vogelsang, Dirk Totzek
Summary: Dynamic pricing has the potential to increase retailers' profits, but it also risks negative customer reactions. This study finds that customers react negatively to dynamic pricing due to norm violation, but this can be mitigated by displaying prices as high discounts. Additionally, customers focus on the general pricing process when evaluating specific transactions in a dynamic pricing context, highlighting the importance of distributive and procedural fairness.
JOURNAL OF BUSINESS RESEARCH
(2022)
Article
Engineering, Industrial
Erbao Cao, Haodong Luo, Yuan Ma, Kevin Lu
Summary: This paper examines the effects of inspection service provision on the interactions between a dynamic-pricing retailer and strategic consumers in the context of the Experience-in-store-and-buy-online (ESBO) strategy. The findings indicate that allowing first-period inspection benefits the retailer, as it deters strategic deferral and increases consumer purchases in the first period. Furthermore, the seemingly negative intertemporal showrooming behavior actually benefits the retailer. Allowing two-period inspection, along with the availability of inspection in the second period, leads to increased prices and profits for the retailer.
INTERNATIONAL JOURNAL OF PRODUCTION RESEARCH
(2023)
Article
Thermodynamics
Zhihao Hua, Jiayong Li, Bin Zhou, Siu Wing Or, Ka Wing Chan, Yunfan Meng
Summary: This paper proposes a game-theoretic multi-energy trading framework to promote the efficient utilization of local renewable energy resources. The framework enhances operational flexibility for electricity, biogas, and heat energy supplies, and enables consumers to actively participate in demand response. A pricing model and optimization method are formulated to determine optimal multi-energy trading between the provider and consumers. The results show significant improvements in the provider's profit and consumer welfare.
Article
Business
Jianchao Sheng, Shaofu Du, Tengfei Nie, Yangguang Zhu
Summary: This paper develops a game-theoretical model to investigate the retailer's pricing strategy choice in the face of informed and uninformed consumers. The analysis shows that in a centralized supply chain, the retailer prefers pre-announced pricing when the fraction of uninformed consumers is small and consumer patience is moderate. However, if the fraction of uninformed consumers is high or consumer patience is low, the retailer prefers dynamic pricing. The analysis also reveals that adopting either pricing strategy can increase retailer's profit and consumer surplus under certain conditions. Furthermore, in a decentralized supply chain, the dynamic pricing strategy adopted by the manufacturer and retailer can benefit themselves and consumers, resulting in a win-win-win situation.
ELECTRONIC COMMERCE RESEARCH AND APPLICATIONS
(2023)
Article
Business
Yuhosua Ryoo, WooJin Kim
Summary: The authors demonstrate that consumers have a strong association between price and ethicality, separate from the traditional price-quality association, which significantly influences their ethical purchase decisions. When consumers encounter ethical products at discount prices, they perceive that the products are not genuinely ethical and tend to avoid purchasing them.
JOURNAL OF BUSINESS RESEARCH
(2023)
Article
Management
Qian Wei, Jianxiong Zhang, Guowei Zhu
Summary: This paper investigates the effects of dynamic pricing and price commitment strategies on inventory holding and sales performance in a production and selling model that accounts for consumer strategic behavior and stochastic learning effect. The results show that consumers' patience level has a positive impact on inventory holding, and for firms with high farsightedness and low inventory holding costs, dynamic pricing with inventory carryover outperforms the price commitment strategy.
INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH
(2022)
Article
Management
Ruozhen Qiu, Yue Sun, Hongcheng Zhou, Minghe Sun
Summary: This paper develops a distributionally robust optimization approach for the pricing and ordering decisions of a retailer with quick response capability in the presence of strategic consumers. The paper considers heterogeneous consumer tastes and uncertain market size. Two distributionally robust dynamic pricing models are proposed, one with quick response and one without. Closed-form solutions are derived, and the effects of parameter values on optimal decisions and expected profits are analyzed. The paper also discusses the conditions for dynamic pricing to benefit the retailer with quick response.
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
(2023)
Article
Management
Shouyu Ma, Zied Jemai, Qingguo Bai
Summary: In this study, the optimal order quantity and selling prices for a retailer using successive discounts are investigated. It is found that the assumption of deterministic and independent demands made in earlier works is unrealistic, and a unique optimal order quantity exists when demands are stochastic and correlated. The study also shows that the discount schemes used in earlier studies are suboptimal and proposes an optimized pricing strategy. Hierarchical and joint optimization methods are derived, and their performance is compared in different scenarios. Results indicate that the joint optimization method outperforms the hierarchical method in situations with low profit margin and high demand correlation.
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
(2022)
Article
Engineering, Multidisciplinary
Zhangwei Feng, Tiaojun Xiao, Danping Wen, Na Luo
Summary: This paper examines pricing strategies in a remanufacturing system, taking into account consumer preferences and behavior. The results show that manufacturers should consider consumer preferences and short-sightedness when choosing a pricing strategy.
JOURNAL OF INDUSTRIAL AND MANAGEMENT OPTIMIZATION
(2023)
Article
Computer Science, Software Engineering
Jose Correa, Raimundo Saona, Bruno Ziliotto
Summary: The paper introduces blind strategies that can achieve a better constant for the prophet secretary problem than previous research, and analyzes the limits of the optimal algorithms for the gambler.
MATHEMATICAL PROGRAMMING
(2021)
Article
Operations Research & Management Science
Jose Correa, Patricio Foncea, Ruben Hoeksma, Tim Oosterwijk, Tjark Vredeveld
Summary: The classic prophet inequality is explored in the context of random order sequences, considering both nonadaptive and adaptive scenarios. For the nonadaptive case, an algorithm achieving an expected reward within at least a 0.632 fraction of the expected maximum is derived, with optimality proven. In the adaptive case with independent and identically distributed random variables, a tight 0.745-approximation is obtained, solving a problem posed by Hill and Kertz in 1982. The application of these prophet inequalities to posted price mechanisms shows tight bounds for both nonadaptive and adaptive scenarios when buyers arrive in random order.
MATHEMATICS OF OPERATIONS RESEARCH
(2021)
Article
Management
Jose Correa, Cristobal Guzman, Thanasis Lianeas, Evdokia Nikolova, Marc Schroder
Summary: This study explores network pricing games and proposes that setting appropriate caps on tolls charged by operators can lead to unique and efficient equilibriums, improving network performance and enhancing user surplus. By introducing the concept of great tolls, the study examines the efficiency of tolls in relation to user welfare, providing insights into optimal network regulation and management strategies.
OPERATIONS RESEARCH
(2022)
Article
Management
Roberto Cominetti, Jose Correa, Neil Olver
Summary: Studying the dynamic equilibrium of queuing networks can predict long-term behavior, with significant impact on the state of stability, queue lengths, and the complete evolution.
OPERATIONS RESEARCH
(2022)
Article
Operations Research & Management Science
Jose Correa, Andres Cristi, Tim Oosterwijk
Summary: This paper investigates dynamic equilibria in the deterministic fluid queuing model in single-source, single-sink networks, discussing the analysis of dynamic network flows from a game-theoretic perspective. The study highlights the importance of dynamic network flows in real-world scenarios and presents key findings, while also addressing remaining fundamental questions and potential future developments. The results provide insights into the price of anarchy in different network structures and suggest potential factors impacting its bound.
MATHEMATICS OF OPERATIONS RESEARCH
(2021)
Article
Operations Research & Management Science
Jose Correa, Paul Dutting, Felix Fischer, Kevin Schewior
Summary: The article focuses on the single-choice prophet inequality problem for independent and identically distributed random variables in optimal stopping theory, and discusses the boundaries of the problem. The authors found that in the case where F is unknown, a tight bound of 0.368 is established, related to the optimal solution of the secretary problem. Furthermore, combining the stopping time with a limited number of samples from F significantly improves the solution.
MATHEMATICS OF OPERATIONS RESEARCH
(2021)
Article
Management
Jose Correa, Natalie Epstein, Rafael Epstein, Juan Escobar, Ignacio Rios, Nicolas Aramayo, Bastian Bahamondes, Carlos Bonet, Martin Castillo, Andres Cristi, Boris Epstein, Felipe Subiabre
Summary: The centralized school admission mechanisms are an attractive way of improving social welfare and fairness in large educational systems. The newly established school choice system in Chile, is used for all school grade levels and faces unprecedented design challenges. The primary goal is to favor the assignment of siblings to the same school.
OPERATIONS RESEARCH
(2022)
Article
Management
Veronica Diaz, Ricardo Montoya, Sebastian Maldonado
Summary: This study proposes a machine learning approach to identify attribute non-attendance (ANA) at the individual level and predict consumer choices in conjoint experiments. Extensive simulation and empirical testing demonstrate the good performance and usefulness of the proposed method.
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
(2023)
Article
Multidisciplinary Sciences
Javier Cembrano, Jose Correa, Victor Verdugo
Summary: Deciding how to allocate seats in a deliberative assembly is a fundamental problem in political organization, and this paper introduces a study on multidimensional proportional apportionment. The research finds that while such apportionments are computationally challenging, approximate solutions can be found.
PROCEEDINGS OF THE NATIONAL ACADEMY OF SCIENCES OF THE UNITED STATES OF AMERICA
(2022)
Article
Management
Jose Correa, Dana Pizarro, Gustavo J. Vulcano
Summary: In this dynamic pricing problem, a firm aims to maximize expected revenue by selling one item to a buyer. The firm determines a price function over an infinite horizon. The buyer, who has a private value for the item, strategizes over the timing of the purchase to maximize expected utility. The value of the seller's ability to observe the buyer's arrival time in terms of expected revenue is analyzed.
MANAGEMENT SCIENCE
(2023)
Article
Operations Research & Management Science
Jose Correa, Andres Cristi, Boris Epstein, Jose A. Soto
Summary: This paper presents a unified approach to single selection optimal stopping problems with random arrival order and independent sampling. The decision maker initially samples N items independently with probability p, and observes the relative rankings of these sampled items. The goal is to maximize the reward by making irrevocable stop/continue decisions while facing the remaining items and observing their rankings. The paper covers the cases where the reward values are known and adversarial, recovering classic results and determining the optimal algorithm and competitive ratios.
MATHEMATICS OF OPERATIONS RESEARCH
(2023)
Proceedings Paper
Computer Science, Theory & Methods
Jose Correa, Andres Cristi
Summary: In online combinatorial auctions, a constant factor prophet inequality has been proven to exist for subadditive valuations using a novel sampling idea called the Mirror Lemma, resolving a central open problem in the field.
PROCEEDINGS OF THE 55TH ANNUAL ACM SYMPOSIUM ON THEORY OF COMPUTING, STOC 2023
(2023)
Article
Business
Marcel Goic, Camilo Levenier, Ricardo Montoya
Summary: The design of satisfactory shopping experiences is essential for long-term profitability in modern retailing, and companies are interested in identifying key drivers that shape customer satisfaction. Larger store formats are associated with higher satisfaction levels, and specific elements of service execution vary significantly across store formats. Loss aversion exists in shopping experience, where poor performance has a larger impact on customer satisfaction than superior performance.
JOURNAL OF RETAILING AND CONSUMER SERVICES
(2021)
Article
Psychology, Applied
Andres Musalem, Ricardo Montoya, Martin Meissner, Joel Huber
Summary: This study identifies four attentional processes that impact efficiency and accuracy in repeated lexicographic tasks, including Orientation, Wrong Target, Duration, and Repetition. The research suggests that Orientation and Repetition have a positive impact on accuracy, while Duration and Wrong Target have a smaller effect on accuracy.
JOURNAL OF BEHAVIORAL DECISION MAKING
(2021)
Article
Business
Ricardo Montoya, Constanza Flores