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题目:Selling to Time-inconsistent Consumers 2021-09-28


题目:Selling to Time-inconsistent Consumers

主讲人:Li Jiang(姜力)教授

时间:2021.9.29 10:00

地点:管院313会议室

主办:工业工程与运营管理系

欢迎广大师生参加


Abstract

Empirical evidence indicates that consumers subjectively weigh the near future more heavily than the further future. When purchasing investment products, they make payments and exert efforts before receiving payoffs. Due to the time difference between incurring cost and receiving payoff, subjective discounting can cause consumers to exhibit time-inconsistent purchase behavior. We investigate the impact of this consumer behavior on the pricing strategies of firms in competitive markets. In a two-period setting, each consumer purchases a product in period one or two, or leaves without purchase. Each firm adopts either dynamic pricing to adjust prices over periods or static pricing to commit to a price. We demonstrate that a firm should adopt a strategy alongside a price trajectory that fits the magnitude of consumers’ time-inconsistency and the quality of its product. Firms have a stronger incentive to adopt dynamic pricing as consumers exhibit stronger time-inconsistency. The skimming policy to decrease prices over time is not necessarily optimal. Static pricing is not always effective in deterring consumers’ purchase postponement but can undermine a firm’s profit. Compared to when both firms engage in dynamic pricing, the firm offering a high-quality product is more likely than its low-quality counterpart to suffer profit loss by unilateral price commitment. As both firms commit to static prices, they are under intense competition and the low-quality firm is more likely to lose profit due to lack of pricing flexibility for differentiated consumer segments.


Professor Li Jiang obtained his PhD in Operations and Management Science from the Ross School of Business in the University of Michigan. He joined the Department of Logistics and Maritime Studies in the Hong Kong Polytechnic University in 2007 and is now a Full Professor. His research interests include data-driven operations, information sharing, credence goods market, behavioural operations, and sharing economy platforms. He has published in Management Science, Manufacturing & Service Operations Management, Production and Operations Management, and Naval Research Logistics, and he serves on the editorial boards for these journals. Professor Jiang was recognized for outstanding scholarly contributions by the European Association of Operations Research in 2018, and was named Chang Jiang Scholar by the Ministry of Education of China in 2020.