Ticket pricing for entertainment events under a dual-channel environment: a game-theoretical approach using uncertainty theory

Reza Maihami, Devika Kannan (), Mohammad Fattahi, Chunguang Bai () and Iman Ghalehkhondabi
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Reza Maihami: East Tennessee State University
Devika Kannan: University of Southern Denmark
Mohammad Fattahi: Northumbria University
Chunguang Bai: University of Electronic Science and Technology of China
Iman Ghalehkhondabi: Howard University

Annals of Operations Research, 2023, vol. 331, issue 1, No 16, 503-542

Abstract: Abstract The pricing of tickets is a crucial decision when managing entertainment events like concerts, operas, ballets, and theater performances. In this study, we examine the pricing decisions made by two major decision-makers before an entertainment event: the venue and the online retailer. In a game-theoretic approach with uncertain information, the interactions between decision-makers are studied in a single and dual-channel structure. A confidence-level-based uncertainty theory is utilized in order to formulate the amount of uncertainty, and the optimal solutions are analytically computed to maximize the total profit for both players. There are three distinct cases studied, including two single-channel market cases (one in which only the venue sells the tickets, and another in which only the online platform sells the tickets) as well as a dual-channel market case (in which both players sell tickets). Stackelberg and Nash games are used to illustrate the interactions between players in each game. The results indicate the optimal pricing, service level improvement, and total profit for both the venue and the online retailer. Additionally, it is shown that the amount of risk (confidence level) the decision-makers are willing to accept strongly affects the optimal solution. In some cases, the roles of the market participants do not have a significant impact on the optimal solution. The findings of this paper can help practitioners in the entertainment industry make better ticket pricing decisions in an uncertain and competitive environment.

Keywords: Ticket pricing; Entertainment; Dual-channel service sale; Uncertainty theory; Game theory (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10479-023-05192-x

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