A. Van Den Boer (Universiteit Von Amsterdam) - Dynamic Pricing with Demand Learning and Reference Effects
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 Read more [...]
