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- Title
Pricing Strategies under Behavioral Observational Learning in Social Networks.
- Authors
Qiu, Liangfei; Whinston, Andrew B.
- Abstract
The increasing pervasiveness of social networks allows users to share purchase behaviors with their online friends. In this study, we examine optimal pricing strategies of a monopolistic firm using an analytical model that accounts for behavioral observational learning in social networks. We show that a seller could potentially control the information available to future customers and induce behavioral observational learning, using an information-revealing pricing strategy. This result suggests that offering introductory discounts is not always an effective method to boost purchases in social networks. It could prevent the behavioral observational learning that would increase future customers' willingness to pay.
- Subjects
PRICING; OBSERVATIONAL learning; SOCIAL networks; ECONOMIC competition; CONSUMERS
- Publication
Production & Operations Management, 2017, Vol 26, Issue 7, p1249
- ISSN
1059-1478
- Publication type
Article
- DOI
10.1111/poms.12693