Published January 1, 2022
| Version v1
Journal article
Open
Analyzing multiple pricing decisions for substitutes under stochastic demand: An experiment
- 1. Kadir Has Univ, Business Adm Dept, TR-34083 Istanbul, Turkey
- 2. Middle East Tech Univ, Dept Econ, Ankara, Turkey
Description
This study investigates how individuals choose prices for two substitutes under stochastic demand in an airline setting. We design two treatments: "symmetrical" and "asymmetrical," meaning the demand distribution of the two flights having the same size of support or not. Several insights are obtained. First, the decision makers' price choices are closer to the theoretical benchmarks in the symmetrical setting. Next, the subjects do not want to overprice and fly with empty seats, exhibiting "loss aversion with reference point." Finally, the subjects often treat the flights as independent rather than interrelated and price them separately, using an anchoring-and-adjusting heuristic.
Files
bib-54bf20e3-8ea1-4ec6-8809-d9463e4ef455.txt
Files
(192 Bytes)
| Name | Size | Download all |
|---|---|---|
|
md5:5695b6436f12a49b9fcdafabb197d497
|
192 Bytes | Preview Download |