{"title":"Upgrades, Upsells and Pricing in Revenue Management","authors":"G. Gallego, C. Stefanescu","doi":"10.2139/ssrn.1334341","DOIUrl":"https://doi.org/10.2139/ssrn.1334341","url":null,"abstract":"Capacity providers often experience a mismatch between supply and demand that can be partially alleviated while improving revenues by allowing for product upgrades. When prices are fixed and demands are independent, the problem is to decide which customer demands to upgrade to which products and when. We show that a fairness constraint can be imposed without loss of optimality under mild conditions. We also investigate a model that limits upgrades to the next higher quality product, and we provide necessary and sufficient conditions for its revenues to be as high as that of any less restricted upgrade model. Resellers of capacity also have an incentive to use upgrades as a mechanism to entice customers to higher quality products with higher commission margins. We show that this practice can be very profitable and that the profits can be much larger than direct commissions from sales would indicate. We then investigate the case where sellers have pricing flexibility and customer demand is driven by a choice model. We derive pricing formulas under the assumption that demand for products follows a multinomial logit model, and we develop an algorithm for finding a global optimal solution to the capacity constrained profit function. For this model we show that neither upgrades nor upsells improve profits when margins are homogenous and there is complete freedom in selecting prices. However, upgrades can improve revenues significantly when sensible business constraints on prices are imposed and when margins are heterogenous.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"57 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114561492","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Discrete Choice and the Social Multiplier","authors":"S. Kominers","doi":"10.2139/ssrn.1285730","DOIUrl":"https://doi.org/10.2139/ssrn.1285730","url":null,"abstract":"This note extends the Brock and Durlauf (2001) model of discrete choice with social interactions to a setting with multiple locations. This generalization leads to a closed-form measure of the \"social multiplier\" akin to that of Glaeser, Sacerdote, and Scheinkman (2003). The dynamics of this multiplier expose the relationship between the aggregate social outcome and the strength of the social multiplier.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"2 5","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120824679","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Design Criteria to Develop Choice Experiments to Measure the WTP Accurately","authors":"Bart Vermeulen, P. Goos, R. Scarpa, M. Vandebroek","doi":"10.2139/ssrn.1288553","DOIUrl":"https://doi.org/10.2139/ssrn.1288553","url":null,"abstract":"To measure the willingness-to-pay (WTP) accurately, Vermeulen et al. [2008] apply the c-optimality criterion to generate designs for conjoint choice experiments. This criterion is based on minimizing the sum of the variances of the WTP estimators approximated by the delta method. Designs generated based on this criterion lead to more accurate WTP estimates than the ones obtained by standard designs and reduce considerably the occurrence of extreme WTP estimates, although they do not exclude them. In this paper, other optimality criteria are considered to tackle this problem. We distinguish between criteria in preference space on the one hand and criteria in WTP-space on the other hand. In a simulation study and a numerical example, we compare the accuracy of the WTP and the utility coefficient estimates yielded by the designs based on these new criteria.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"18 3 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2008-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133735404","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"On Modified Discriminant Analysis","authors":"Marcin Owczarczuk","doi":"10.2139/ssrn.1015527","DOIUrl":"https://doi.org/10.2139/ssrn.1015527","url":null,"abstract":"Discriminant analysis is mostly used to predict the value of a discrete dependent variable of an observation on the basis of a set of predictors. The commonly used criterion of the predictive power is the fraction of incorrectly predicted cases in the sample. In this article we construct a model for a modified discriminant problem. Namely to find a subpopulation of a given size having the highest percentage of observations of a chosen class. Our model maximizes the following criterion of the predictive power: the fraction of observations from chosen class in the found subpopulation.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2007-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129209014","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Tests of Benefit Transfer Across Sites and Populations in the Fitzroy Basin, Research Report No. 4","authors":"J. Rolfe, A. Loch, J. Bennett","doi":"10.2139/ssrn.1440623","DOIUrl":"https://doi.org/10.2139/ssrn.1440623","url":null,"abstract":"Policy makers are often interested in transferring benefit estimates made in one situation to related circumstances. This transfer of values may be inaccurate if significant differences exist between the sites in question, or if different population groups are involved. To identify where benefit transfer applications may be appropriate, the results of similar Choice Modelling experiments across different sites and population groups are reported. The experiments were centered on a major river catchment in Queensland, Australia, and indicate that some benefit transfers are possible.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2002-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124444946","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Von Neuman - Morgenstern Utilities and Cardinal Preferences","authors":"G. Chichilnisky","doi":"10.1287/moor.10.4.633","DOIUrl":"https://doi.org/10.1287/moor.10.4.633","url":null,"abstract":"We study the aggregation of preferences when intensities are taken into account: the aggregation of cardinal preferences, and also of von Neumann-Morgenstern utilities for choices under uncertainty. We show that with a finite number of choices there exist no continuous anonymous aggregation rules that respect unanimity, for such preferences or utilities. With infinitely many (discrete sets of) choices, such rules do exist and they are constructed here. However, their existence is not robust: each is a limit of rules that do not respect unanimity. Both results are for a finite number of individuals. The results are obtained by studying the global topological structure of spaces of cardinal preferences and of von Neumann-Morgenstern utilities. With a finite number of choices, these spaces are proven to be noncontractible. With infinitely many choices, on the other hand, they are proven to be contractible.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1985-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126089195","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"A Micro-Econometric Approach to Geographic Market Definition in Local Retail Markets: Demand Side Considerations","authors":"W. Beckert","doi":"10.2139/ssrn.1726772","DOIUrl":"https://doi.org/10.2139/ssrn.1726772","url":null,"abstract":"This paper formalizes an empirically implementable framework for the definition of local antitrust markets in retail markets. This framework rests on a demand model that captures the trade-off between distance and pecuniary cost across alternative shopping destinations within local markets. The paper develops, and presents estimation results for, an empirical demand model at the store level for groceries in the UK.","PeriodicalId":165362,"journal":{"name":"ERN: Discrete Regression & Qualitative Choice Models (Single) (Topic)","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128405775","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}