Dynamic pricing decisions and seller-buyer interactions under capacity constraints
type: Item
instance of: scholarly article
title: Dynamic pricing decisions and seller-buyer interactions under capacity constraints
zbMATH Open document ID: 1404.91110
author: Vincent Mak
author: Amnon Rapoport
author: Eyran J. Gisches
published in: Games
publication date: 2018-07-10T00:00:00Z
review text: Summary: Focusing on sellers' pricing decisions and the ensuing seller-buyer interactions, we report an experiment on dynamic pricing with scarcity in the form of capacity constraints. Rational expectations equilibrium solutions are constructed and then tested experimentally with subjects assigned the roles of sellers and buyers. We investigate behavior in two between-subject conditions with high and moderate levels of capacity. Our laboratory market exhibits strategic sophistication: the price offers of sellers and the buyers' aggregate responses largely approximate equilibrium predictions. We also observe systematic deviations from equilibrium benchmarks on both sides of the market. Specifically, in our experiment the sellers are boundedly strategic: their prices often exhibit strategic adjustments to profit from buyers with limited strategic sophistication, but they are also often biased towards equilibrium pricing even when that would not be ex-post optimal.
Mathematics Subject Classification ID: 91B24
Mathematics Subject Classification ID: 91A90
zbMATH DE Number: 6901020
zbMATH Keywords: dynamic pricing decisions
zbMATH Keywords: scarcity
zbMATH Keywords: capacity constraints
zbMATH Keywords: strategic seller-buyer interactions
zbMATH Keywords: experiments
zbMATH Keywords: game theory
MaRDI profile type: Publication
full work available at URL: g9010010
OpenAlex ID: W2791349566
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DOI: 10.3390/G9010010
description: scientific article; zbMATH DE number 6901020