Decrease the price now, increase it later: a novel approach to demand learning and dynamic pricing of new experiential products through the lens of construal level theory

Ariit Sengupta (), Amit Kohar (), Himanshu Rathore () and Suresh K. Jakhar ()
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Ariit Sengupta: Indian Institute of Management Lucknow
Amit Kohar: Food Corporation of India
Himanshu Rathore: Indian Institute of Management Lucknow
Suresh K. Jakhar: Indian Institute of Management Lucknow

Journal of Revenue and Pricing Management, 2025, vol. 24, issue 3, No 6, 266-284

Abstract: Abstract In revenue maximization problems with unknown demand, limited price revisions enhance perceived fairness, requiring careful price adjustments by sellers of new experiential products with shorter life-cycles. Under the same context, the study explores a scenario where the unknown demand function belongs to a set of possible demand curves. We propose a pricing policy incorporating consumers’ perceived fairness, quantified using psychological distance from temporal construal theory. Findings reveal that the proposed policy achieves a regret of $$O({log}^{j}N)$$ O ( log j N ) . We also demonstrate the efficacy of our pricing policy through a series of exhaustive numerical simulations and a lab experiment.

Keywords: Dynamic pricing; Demand learning; New experience products; Construal level theory; Psychological distance (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41272-024-00505-6

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