Related papers: Trial Length, Pricing, and Rationally Inattentive …
An informed seller designs a dynamic mechanism to sell an experience good. The seller has partial information about the product match, which affects the buyer's private consumption experience. We characterize equilibrium mechanisms of this…
We consider a novel pricing and advertising framework, where a seller not only sets product price but also designs flexible 'advertising schemes' to influence customers' valuation of the product. We impose no structural restriction on the…
The purpose of this research is to explore whether it is possible to construct a design theory for subscription services for intangible goods from a time discounting perspective, based on quantum information theory, which is the…
We consider a generalization of rational inattention problems by measuring costs of information through the information radius (Sibson, 1969; Verd\'u, 2015) of statistical experiments. We introduce a notion of attention elasticity measuring…
We consider a framework involving behavioral economics and machine learning. Rationally inattentive Bayesian agents make decisions based on their posterior distribution, utility function and information acquisition cost Renyi divergence…
Customer loyalty is crucial for internet services since retaining users of a service to ensure the staying time of the service is of significance for increasing revenue. It demands the retention of customers to be high enough to meet the…
We study the optimal pricing strategy of a monopolist selling homogeneous goods to customers over multiple periods. The customers choose their time of purchase to maximize their payoff that depends on their valuation of the product, the…
Online advertising banners are sold in real-time through auctions.Typically, the more banners a user is shown, the smaller the marginalvalue of the next banner for this user is. This fact can be detected bybasic ML models, that can be used…
This paper establishes a general equivalence between discrete choice and rational inattention models. Matejka and McKay (2015, AER) showed that when information costs are modelled using the Shannon entropy function, the resulting choice…
This paper uses an axiomatic foundation to create a new measure for the cost of learning that allows for multiple perceptual distances in a single choice environment so that some events can be harder to differentiate between than others.…
Free trial promotions, where users are given a limited time to try the product for free, are a commonly used customer acquisition strategy in the Software as a Service (SaaS) industry. We examine how trial length affect users'…
This paper proposes a theory of pricing premised upon the assumptions that customers dislike unfair prices---those marked up steeply over cost---and that firms take these concerns into account when setting prices. Since they do not observe…
We study a two-sided market, wherein, price-sensitive heterogeneous customers and servers arrive and join their respective queues. A compatible customer-server pair can then be matched by the platform, at which point, they leave the system.…
We consider a dynamic pricing problem where customer response to the current price is impacted by the customer price expectation, aka reference price. We study a simple and novel reference price mechanism where reference price is the…
We study the revenue-maximizing mechanism when a buyer's value evolves endogenously because of learning-by-consuming. A seller sells one unit of a divisible good, while the buyer relies on his private, rough valuation to choose his…
Motivated by applications where a system must remain operational via continual procurement of contracts, we study two online contract selection problems under uncertain prices. At each time step, a price drawn from a known distribution is…
As a firm varies the price of a product, consumers exhibit reference effects, making purchase decisions based not only on the prevailing price but also the product's price history. We consider the problem of learning such behavioral…
The performance of an energy system under a real-time pricing mechanism depends on the consumption behavior of its customers, which involves uncertainties. In this paper, we consider a system operator that charges its customers with a…
To choose between two discrete goods, a consumer pays attention to only those with prices below a threshold. From these, she chooses her most preferred good. We assume consumers in a population have the same preference but may have…
A firm that sells a non perishable product considers intertemporal price discrimination in the objective of maximizing its long-run average revenue. We consider a general model of patient customers with changing valuations. Arriving…