Dynamic targeted pricing with strategic consumers

Chen, Yuxin; Zhang, Z. John

doi:10.1016/j.ijindorg.2008.03.002

Cited by 122 publications

(83 citation statements)

References 22 publications

(29 reference statements)

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“…Such discounts initially tend to reduce consumer price sensitivity for a firm's product, as consumers rationally anticipate them; hence prices rise in later periods, thanks to anticipated customer poaching. Chen and Zhang (2009) study a "price for information" strategy, where firms price less aggressively in order to learn more about their customers. Jeong and Maruyama (2009) and Jing (2011) identify conditions under which a firm should discriminate against its first-time and repeat customers.…”

Section: Privacy Consumer Identification and Price Discriminationmentioning

confidence: 99%

The Economics of Privacy

Acquisti

Taylor²,

Wagman³

2016

Journal of Economic Literature

872

406

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Section: Privacy Consumer Identification and Price Discriminationmentioning

confidence: 99%

The Economics of Privacy

Acquisti

Taylor²,

Wagman³

2016

Journal of Economic Literature

872

406

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“…In an infinite-horizon monopolist market with overlapping generations of consumers, prices cycle in equilibrium; the firm is worse off than without customer recognition because consumers foresee future prices cuts Acquisti and Varian (2005) Generally hurts firms; can benefit firms if they provide enhanced services to returning consumers If consumers who hold higher valuation of the product also hold higher valuation of the enhanced services provided to returning consumers, the firm can profitably target high-valuation consumers with a high price conditional on initial purchase Pazgal and Soberman (2008) Generally hurts firms who add the same values to past customers Since duopolist firms can lock in their past customers by adding value in period two, they compete more aggressively for customers in period one Chen and Zhang (2009) Can benefit firms in both periods if the market consists of loyal vs. pricesensitive consumers…”

mentioning

confidence: 99%

The Perils of Behavior-Based Personalization

Zhang¹

2011

Marketing Science

149

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Abstract"Behavior-based personalization" has gained popularity in recent years, whereby businesses offer personalized products based on consumers' purchase histories. This paper highlights two perils of behavior-based personalization in competitive markets. First, although purchase histories reveal consumer preferences, competitive exploitation of such information damages differentiation, similar to the classic finding that behavior-based price discrimination intensifies price competition. With endogenous product design, there is yet a second peril. It emerges when forward-looking firms try to avoid the first peril by suppressing the information value of purchase histories. Ideally, if a market leader serves all consumers on day one, purchase histories contain no information about consumer preferences. However, knowing that their rivals are willing to accommodate a market leader, firms are more likely to offer a mainstream design at day one, which jeopardizes differentiation. Based on this understanding, I investigate how the perils of behavior-based personalization change under alternative market conditions, such as firms' better knowledge about their own customers, consumer loyalty and inertia, consumer self-selection, and the need for classic designs.

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“…This allows us to concentrate on the main aspect of information transmission from the buyer to the seller through disclosed search behavior. A natural next step would be to introduce competition (Fudenberg and Tirole, 2000;Chen and Zhang, 2009) between multiple buyers and multiple sellers. In this case, also other aspects of optimal search behavior become relevant.…”

Section: Discussionmentioning

confidence: 99%

Strategic Inattention in Product Search

Hillenbrand

Hippel

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractOnline platforms provide search tools that help consumers to get betterfitting product offers. But this technology makes consumer search behavior also easily traceable for the platform and allows for real-time price discrimination. Consumers face a trade-off: Search intensely and receive better fits at potentially higher prices or restrict search behavior -be strategically inattentive -and receive a worse fit, but maybe a better deal. We study the strategic buyer-seller interaction in such a situation theoretically as well as experimentally. The search technology we use in the laboratory leads by construction to better-fitting products, but we indeed find that only sellers profit from the buyers' use of the offered search tools.

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Dynamic targeted pricing with strategic consumers

Cited by 122 publications

References 22 publications

The Economics of Privacy

The Economics of Privacy

The Perils of Behavior-Based Personalization

Strategic Inattention in Product Search

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