11,779 research outputs found
Dynamic pricing models for electronic business
Dynamic pricing is the dynamic adjustment of prices to consumers
depending upon the value these customers attribute to a product or service. Today’s
digital economy is ready for dynamic pricing; however recent research has shown
that the prices will have to be adjusted in fairly sophisticated ways, based on
sound mathematical models, to derive the benefits of dynamic pricing. This article
attempts to survey different models that have been used in dynamic pricing. We
first motivate dynamic pricing and present underlying concepts, with several examples,
and explain conditions under which dynamic pricing is likely to succeed. We
then bring out the role of models in computing dynamic prices. The models surveyed
include inventory-based models, data-driven models, auctions, and machine
learning. We present a detailed example of an e-business market to show the use
of reinforcement learning in dynamic pricing
Cumulative Prospect Theory Based Dynamic Pricing for Shared Mobility on Demand Services
Cumulative Prospect Theory (CPT) is a modeling tool widely used in behavioral
economics and cognitive psychology that captures subjective decision making of
individuals under risk or uncertainty. In this paper, we propose a dynamic
pricing strategy for Shared Mobility on Demand Services (SMoDSs) using a
passenger behavioral model based on CPT. This dynamic pricing strategy together
with dynamic routing via a constrained optimization algorithm that we have
developed earlier, provide a complete solution customized for SMoDS of
multi-passenger transportation. The basic principles of CPT and the derivation
of the passenger behavioral model in the SMoDS context are described in detail.
The implications of CPT on dynamic pricing of the SMoDS are delineated using
computational experiments involving passenger preferences. These implications
include interpretation of the classic fourfold pattern of risk attitudes,
strong risk aversion over mixed prospects, and behavioral preferences of self
reference. Overall, it is argued that the use of the CPT framework corresponds
to a crucial building block in designing socio-technical systems by allowing
quantification of subjective decision making under risk or uncertainty that is
perceived to be otherwise qualitative.Comment: 17 pages, 6 figures, and has been accepted for publication at the
58th Annual Conference on Decision and Control, 201
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