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1 – 1 of 1Yong Wang, Tianze Tang, Weiyi Zhang, Zhen Sun and Qiaoqin Xiong
In this paper, the authors study the effect of consumers' fairness preferences on dynamic pricing strategies adopted by platforms in a non-cooperative game.
Abstract
Purpose
In this paper, the authors study the effect of consumers' fairness preferences on dynamic pricing strategies adopted by platforms in a non-cooperative game.
Design/methodology/approach
This study applies fair game and repeated game theory.
Findings
This study reveals that, in a one-shot game, if consumers have fairness preferences, dynamic prices will slightly decline. In a repeated game, dynamic prices will be reduced even when consumers do not have fairness preferences. When fairness preferences and repeated game are considered simultaneously, dynamic prices are most likely to be set at fair prices. The authors also discuss the effect of platforms' discounting factors, the consumers' income and alternative choices of consumption on the dynamic prices.
Research limitations/implications
The study findings illustrate the importance of incorporating behavioral elements in understanding and designing the dynamic pricing strategies for platforms and the implications on social welfare in general.
Originality/value
The authors developed a theoretical model to incorporate consumers' fairness preference into the decision-making process of platforms when they design the dynamic pricing strategies.
Details