Learning buyers' valuation distribution in posted-price selling

Ruqu Wang () and Yongmin Chen

Economic Theory, 1999, vol. 14, issue 2, 417-428

Abstract: A dynamic pricing model is studied where a seller of an asset faces a sequence of potential buyers whose valuation distribution is unknown to the seller. The seller learns more about the distribution in the selling process and becomes less optimistic as the object remains unsold. We characterize the optimal posted prices which incorporate updated beliefs every period, and derive a rather tight sufficient condition under which these prices decline over time. An example is provided where the optimal prices can actually increase over time if the condition is violated.

Keywords: Price determination; Posted-price selling; Learning. (search for similar items in EconPapers)
JEL-codes: C61 D42 D82 D83 (search for similar items in EconPapers)
Date: 1999-08-24
Note: Received: May 12, 1998; revised version: July 7, 1998
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Citations: View citations in EconPapers (4)

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Working Paper: Learning buyers' valuation distribution in posted-price selling (1997)
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