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Pre-announced posted pricing scheme: Existence and uniqueness of equilibrium bidding strategy
- Authors
- Kim, Seungbeom; Huh, Woonghee Tim; Dasu, Sriram
- Issue Date
- Mar-2015
- Publisher
- ELSEVIER SCIENCE BV
- Keywords
- Strategic customers; Posted pricing; Bayesian-Nash equilibrium; Markdown
- Citation
- OPERATIONS RESEARCH LETTERS, v.43, no.2, pp.151 - 160
- Journal Title
- OPERATIONS RESEARCH LETTERS
- Volume
- 43
- Number
- 2
- Start Page
- 151
- End Page
- 160
- ISSN
- 0167-6377
- Abstract
- We scrutinize the uniqueness issue of the equilibrium behavior of strategic customers making inter-temporal purchase decisions. We present that multiple equilibria can exist even in the simple setting where two identical customers compete for one unit of item. We prove the existence of a unique symmetric equilibrium when there are no more than three buyers whose valuations follow a uniform distribution. When there are multiple equilibria we show that the bidding strategy having the biggest threshold is Pareto-optimal for buyers. (C) 2014 Elsevier B.V. All rights reserved.
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Related Researcher
- Kim, Seung beom
- Business Administration (Business Administration)