Incorporating consumer perspectives into pricing of perishable services

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The proposed research models interactions between retailers and consumers by investigating pricing decisions by retailers and purchase decision making by consumers in game-theoretical frameworks. While traditional dynamic pricing literature assumes passive consumers, the proposed research endogenizes consumers' decision making in dynamic pricing, finite horizon, competitive settings. In one setting, the largest consistent set concept will be utilized to search for the set of possibly-stable states, and in another, mixed pricing strategies will be explored. Using these approaches will introduce uncertainty about future prices, as consumers and retailers will not know which of the possible outcomes will be realized. Thus, the impact of consumer decision making on prices and retailers' profits will be analyzed, and the approaches to mitigate strategic consumer behavior will be explored.