Dynamic pricing of network goods with boundedly rational consumers

editor score
Editor Score:
65
editor score
Quality:
70
editor score
Usability:
35
editor score
Reliability:
60
Asset Type
License
Free
Expiration
Tuesday, May 28, 2024
Publication year
2013
Industry
IT

This report explains a consumer’s demand for a network good. The demand for a network good depend upon the demands of other consumers, and therefore choosing this demand optimally poses a cognitive challenge for most consumers. In the outlined model of pricing a network good, consumers display “bounded rationality” where the vendor chooses a dynamic price path to maximize the present value of profit. The result is a price and quantity path that differs significantly from that predicted by standard economic theory and is closer to empirical observations.

Yegii expert:
Time horizon:
2-5 Years
Yegii Reviews: