Treating Symmetric Buyers Asymmetrically

Shraman Banerjee ()
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Shraman Banerjee: Department Of Economics, Shiv Nadar University

No 2022-02, Working Papers from Shiv Nadar University, Department of Economics

Abstract: We investigate a finite-horizon dynamic pricing problem of a seller under limited commitment. Even when the buyers are ex-ante symmetric to the seller, the seller can charge different prices to different buyers. We show that under the class of posted-price mechanisms this asymmetric treatment of symmetric buyers strictly revenue-dominates symmetric treatment. The seller implements this by using a priority-based deterministic tie-breaking rule instead of using a random tie-breaking rule. The effect of asymmetric treatment on revenue increment increases monotonically as we increase the time horizon of the game.

Keywords: Dynamic Pricing; Asymmetric Mechanism. (search for similar items in EconPapers)
JEL-codes: C70 D42 D44 D82 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2022-03-25
New Economics Papers: this item is included in nep-com, nep-gth and nep-mic
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