How heuristic pricing shapes the aggregate market: the “Cheap Twin Paradox”

IF 2.8 4区管理学 Q2 BUSINESS

Industrial and Corporate Change Pub Date : 2024-07-24 DOI:10.1093/icc/dtae025

Florian M Artinger, Gerd Gigerenzer

引用次数: 0

Abstract

How do firms set prices when faced with an uncertain market? We study the pricing strategies of car dealers for used cars using online data and interviews. We find that 97% of 628 dealers employ an aspiration-level heuristic similar to a Dutch auction. Dealers adapt the parameters of the heuristic—initial price, duration, and change in price—to their local market conditions, such as number of competitors, population density, and GDP per capita. At the same time, the aggregate market is described by a model of equilibrium price dispersion. Unlike the equilibrium model, the heuristic correctly predicts systematic pricing characteristics such as high initial price, price stickiness, and the “cheap twin paradox.” We also find first evidence that heuristic pricing can generate higher profits given uncertainty than the equilibrium strategy.

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启发式定价如何塑造总体市场："廉价双胞胎悖论

面对不确定的市场，企业如何制定价格？我们利用在线数据和访谈研究了汽车经销商的二手车定价策略。我们发现，628 家经销商中有 97% 采用了类似于荷兰式拍卖的愿望级启发式。经销商会根据当地市场条件，如竞争对手数量、人口密度和人均 GDP 等，调整启发式的初始价格、持续时间和价格变化等参数。同时，总体市场由均衡价格分散模型来描述。与均衡模型不同的是，启发式能正确预测系统性定价特征，如高初始价格、价格粘性和 "廉价孪生悖论"。我们还首次发现了启发式定价能在不确定的情况下比均衡策略产生更高的利润。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Industrial and Corporate Change Multiple-

CiteScore

5.10

自引率

4.00%

发文量

期刊介绍： The journal covers the following: the internal structures of firms; the history of technologies; the evolution of industries; the nature of competition; the decision rules and strategies; the relationship between firms" characteristics and the institutional environment; the sociology of management and of the workforce; the performance of industries over time; the labour process and the organization of production; the relationship between, and boundaries of, organizations and markets; the nature of the learning process underlying technological and organizational change.