A note on pricing with risk aversion

Luca Colombo and Paola Labrecciosa

European Journal of Operational Research, 2012, vol. 216, issue 1, 252-254

Abstract: We consider the pricing problem of a risk-averse seller facing uncertain demand. Demand uncertainty stems from buyers’ valuations being privately observed. By imposing very mild restrictions on the distribution of buyers’ valuations (an increasing generalized failure rate distribution) and the Bernoulli utility function, we show that a risk-averse seller will unambiguously post a lower price than a risk-neutral counterpart.

Keywords: Economics; Pricing; Risk management; Utility theory (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:216:y:2012:i:1:p:252-254

DOI: 10.1016/j.ejor.2011.07.027

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