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- Title
Learning buyers' valuation distribution in posted-price selling.
- Authors
Yongmin Chen; Ruqu Wang
- Abstract
A dynamic pricing model is studied where a seller of an asset faces a sequence of potential buyers whose valuation distribution is unknown to the seller. The seller learns more about the distribution in the selling process and becomes less optimistic as the object remains unsold. We characterize the optimal posted prices which incorporate updated beliefs every period, and derive a rather tight sufficient condition under which these prices decline over time. An example is provided where the optimal prices can actually increase over time if the condition is violated.
- Subjects
PRICES; PRICING; VALUATION; CONSUMERS; MATHEMATICAL models
- Publication
Economic Theory, 1999, Vol 14, Issue 2, p417
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s001990050301