Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration

Shuang Zhang () and Yueping Du
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Shuang Zhang: School of Economics and Management, Xidian University, Xi’an 710126, China
Yueping Du: School of Economics and Management, Xidian University, Xi’an 710126, China

Mathematics, 2025, vol. 13, issue 2, 1-21

Abstract: Manufacturers and consumers are boundedly rational and ultimately seek evolutionarily stable strategies through trial and error, imitation, and learning. It is important to study the pricing strategies of manufacturers and the purchasing channel decisions of consumers in the context of increasingly fierce competition in online channels, in addition to consumers’ loss aversion due to increasingly confusing promotional strategies; accordingly, in this paper, an evolutionary game including both parties is constructed, and the loss aversion factor from prospect theory is introduced. Based on data from Chinese media reports on the cosmetics industry, simulation and sensitivity analyses were conducted using Matlab R2024a. The results indicate that—in addition to channel services affecting the evolutionarily stable strategy for purchasing channel selection—a decrease in consumer loss aversion will help consumers reach the evolutionarily stable strategy faster. For manufacturers, channel services do not affect their evolution to a unified pricing strategy; however, when consumer loss aversion increases, manufacturers’ evolutionarily stable strategy will shift from a unified pricing strategy to a differentiated pricing strategy.

Keywords: loss aversion; price strategy; evolutionary game; dual channel; Hotelling (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2025
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