Learning to Price with Reference Effects

@article{Kazerouni2017LearningTP,
  title={Learning to Price with Reference Effects},
  author={Abbas Kazerouni and Benjamin Van Roy},
  journal={ArXiv},
  year={2017},
  volume={abs/1708.09020}
}
As a firm varies the price of a product, consumers exhibit reference effects, making purchase decisions based not only on the prevailing price but also the product's price history. We consider the problem of learning such behavioral patterns as a monopolist releases, markets, and prices products. This context calls for pricing decisions that intelligently trade off between maximizing revenue generated by a current product and probing to gain information for future benefit. Due to dependence on… Expand
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