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Treating Symmetric Buyers Asymmetrically

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  • Banerjee, Shraman

Abstract

We investigate a finite-horizon dynamic pricing problem of a seller under limited commitment. Even when the buyers are ex-ante symmetric to the seller, the seller can charge different prices to different buyers. We show that under the class of posted-price mechanisms this asymmetric treatment of symmetric buyers strictly revenue-dominates symmetric treatment. The seller im- plements this by using a priority-based deterministic tie-breaking rule instead of using a random tie-breaking rule. The effect of asymmetric treatment on revenue increment increases monotonically as we increase the time horizon of the game.

Suggested Citation

  • Banerjee, Shraman, 2021. "Treating Symmetric Buyers Asymmetrically," MPRA Paper 105971, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:105971
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Dynamic Pricing; Asymmetric Mechanism; Non-Anonymity;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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