线上老虎机

TIME: 2025/4/14   10:00

VENUE: 317 E&F HALL

TITLE: Dynamic Pricing when Consumers are Mental Accountants

ABSTRACT: Mental accounting has been frequently utilized to understand consumer purchasing behaviors and to elucidate firms’ pricing strategies. For sellers interacting with mental accountants, how to optimally price their products to maximize profits is an important yet underexplored problem. There is no literature addressing the dynamic pricing strategies of sellers when mental accountants are subject to reference price adaptations over time. To fill this gap, we study the dynamic pricing strategies under the mental accounting and reference price adaptation (MARA) framework proposed by Baucells and Hwang (2017). When there is no MARA, static pricing is optimal under our setting. With homogeneous consumers, we finds that the consumer MARA leads to the optimality of price anchoring/promotional pricing followed by penetration pricing. Both the optimal state path and price path achieve global stability. In the presence of consumer heterogeneity in product utility, in addition to the optimal pricing decisions made at each time point, the seller has to determine her price positioning for the long run. We uncover more complex combinations of pricing anchoring, promotional pricing and penetration pricing that cannot be observed in the homogeneous benchmark, and reveal the optimality of the pricing strategies with high-low regime changes. We also find that the state path can achieve local stability instead of global stability, and that the price positioning is jointly determined by the proportion of high-valuation consumers in the market and initial reference price. We shed light on the integrations of multiple pricing strategies such as anchoring, promotional and penetration pricing. We also offer insights on price positioning, and guidelines on how to exploit consumer MARA through pricing strategies.

Biography of the speaker: 

Shen Xiaobei is a professor at the School of Management, University of Science and Technology of China. Her primary research focuses on decision optimization and contract design, including the development of optimization methods for dynamic inventory and pricing decisions, incentive mechanisms and contract design, as well as the impact of new business models on pricing and supply chain decisions. She has published five papers in UTD journals focusing on dynamic decision optimization. She has led Category B and Category C projects of the Youth Program of the National Natural Science Foundation of China (NSFC), as well as a General Program project. She has also participated in an NSFC Innovation Research Group project and a Key Program project. Currently, she serves as a reviewer for the NSFC, an external reviewer for the Hong Kong Research Grants Council, a council member of the Stochastic Service and Operations Management Chapter of the Operations Research Society of China, a council member of the Service Science and Operations Management Chapter of the Chinese Society for “Double Methodology” Research, an editorial board member of "Journal of Business Research", and an editorial board member of "Industrial Engineering and Management".