Consumer Options: Theory and an Empirical Application to a Sports Market

Sainam, Preethika; Balasubramanian, Sridhar; Bayus, Barry L.

doi:10.2139/ssrn.1341763

Cited by 14 publications

(19 citation statements)

References 14 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To ensure model tractability, we assume that consumers have homogeneous preferences for product value and normalize to unity. As we will show in the model extension, relaxing this assumption does not change our Xie and Shugan 2001, Fay and Xie 2008, Fay and Xie 2010, Jerath et al 2010, Sainam et al 2010). Our paper departs from these studies by focusing on firm's optimal strategies to facilitate fit revelation when facing consumer fit uncertainty exogenously existed.…”

Section: Modelmentioning

confidence: 91%

Facilitating Fit Revelation in the Competitive Market

Xie

2013

Management Science

View full text Add to dashboard Cite

T his study examines firms' strategic decisions in the competitive market regarding whether to engage in marketing activities to assist consumers in finding the fit between their personal tastes and products' horizontal attributes. We find that competitive firms' strategies to facilitate fit revelation critically depend on the product qualities they offer. In particular, a firm offering a high-quality product is more likely to facilitate fit revelation in the competitive market than it would as a market monopolist, whereas a firm offering a low-quality product is less likely to do so. In addition, the firm offering the high-quality product implements fit-revealing activities in a greater intensity than its rival that offers the low-quality product, if the quality difference between the two products is small and both products' qualities are sufficiently high.

show abstract

Section: Modelmentioning

confidence: 91%

Facilitating Fit Revelation in the Competitive Market

Xie

2013

Management Science

View full text Add to dashboard Cite

show abstract

“…Lately, Sainam et al (2009) investigate the benefits of call options in sport events. This option allows sport fans to reserve a ticket for the final game until the teams playing in the final are identified.…”

Section: Review Of Related Literaturementioning

confidence: 99%

“…Sainam et al (2009) show that the call options provide extra revenue when they are offered with the advance purchase option. Balseiro et al (2011) extend the work of Sainam et al (2009) by including pricing analysis of call options. They propose a two-stage optimization model.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Delayed Purchase Options in Single-Leg Revenue Management

Aydin

Birbil

Topaloğlu

2017

Transportation Science

View full text Add to dashboard Cite

Many airline reservation systems offer the commitment option to their potential passengers. This option allows passengers to reserve a seat for a fixed duration before making a final purchase decision. In this study, we develop single-leg revenue management models that consider such contingent commitment decisions.We start with a dynamic programming model of this problem. This model is computationally intractable as it requires storing a multi-dimensional state space due to book-keeping of the committed seats. To alleviate this difficulty, we propose an alternate dynamic programming formulation that uses an approximate model of how the contingent commitments behave and we show how to extract a capacity allocation policy from the approximate dynamic programming formulation. In addition, we present a deterministic linear programming model that gives an upper bound on the optimal expected revenue from the intractable dynamic programming model. As the problem size becomes large in terms of flight capacity and the expected number of arrivals, we demonstrate an asymptotic lower bound for the deterministic linear programming model. Our extensive numerical study indicates that offering commitment options can noticeably increase the expected revenue even though offering a contingent commitment option may not always be in the best interest of the airline. Also, our results show that the proposed approximate dynamic programming model coordinates capacity allocation and commitment decisions quite well.

show abstract

“…Hence, if firms ignore time preferences in their decision making, they may charge suboptimal prices or even choose a wrong pricing strategy. Although advance selling is well connected to the aspect of intertemporal choice-firms as well as consumers must decide when they sell or buy-the effect of time preferences on optimal prices and the profitability of advance selling was not analyzed, neither in the seminal paper of Shugan and Xie [2] nor in the extensions of their model [8][9][10][11][12], nor in Sainam, Balasubramanian, and Bayus [13] who analyzed the profitability of advance selling in comparison to option pricing. Consequently, it is not known if different decisions occur in case firms do not ignore time preferences.…”

Section: Introductionmentioning

confidence: 99%

Effect of Time Preferences on Optimal Prices and Profitability of Advance Selling

Schaaf

Skiera

2014

Cust. Need. and Solut.

View full text Add to dashboard Cite

In advance selling, firms announce that they will charge different prices for those who buy early vs. those who buy late. Previous literature showed that advance selling allows for increased profits in a rather wide range of settings, which typically hold in many service industries. Despite ample evidence that consumers exhibit higher discount rates than firms, it is not clear how differences in time preferences affect optimal prices of advance selling. This article develops an analytical model for optimal prices in advance selling that accounts for such differences in time preferences. In contrast to previous literature, the results indicate that advance selling quickly becomes less profitable than spot selling if consumers discount at a higher rate than firms (and vice versa). They also show that previous findings about the optimality of different advance selling strategies are unaffected if consumers and firms discount at the same rate, despite different optimal prices. Another major implication of our work is that analytical models and managerial decision making should consider time preferences if payment and consumption might occur at different points in time.

show abstract

Consumer Options: Theory and an Empirical Application to a Sports Market

Cited by 14 publications

References 14 publications

Facilitating Fit Revelation in the Competitive Market

Facilitating Fit Revelation in the Competitive Market

Delayed Purchase Options in Single-Leg Revenue Management

Effect of Time Preferences on Optimal Prices and Profitability of Advance Selling

Contact Info

Product

Resources

About