Asking Price and Price Discounts: The Strategy of Selling an Asset Under Price Uncertainty
AbstractWe consider fixed and asking price strategies in the context of selling an asset with Bernoullian updating of the sellerâ€™s subjective probability of sale at a given price. The determination of optimal fixed, asking and endogenous reservation prices is discussed under risk-neutrality and expected utility maximisation. With risk-neutrality, the optimal asking price exceeds the optimal fixed price when the expected gain is a strictly concave function. The sellerâ€™s choice between the fixed and the asking price strategies depends on several factors: the expected cost of haggling, price competition and the sellerâ€™s attitude towards risk. Copyright Springer Science+Business Media, LLC 2007
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Bibliographic InfoArticle provided by Springer in its journal Theory and Decision.
Volume (Year): 62 (2007)
Issue (Month): 3 (May)
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Web page: http://www.springerlink.com/link.asp?id=100341
fixed price; asking price; price discounts; reservation price; risk attitude;
Other versions of this item:
- Tapan Biswas & Jolian Mchardy, 2012. "Asking Price And Price Discounts: The Strategy Of Selling An Asset Under Price Uncertainty," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 4(1), pages 17-37, June.
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