Optimal price skimming by a monopolist facing rational consumers
Management Science
Commissioned Paper: An Overview of Pricing Models for Revenue Management
Manufacturing & Service Operations Management
Intertemporal Pricing with Strategic Customer Behavior
Management Science
Revenue Management of Callable Products
Management Science
Strategic Capacity Rationing to Induce Early Purchases
Management Science
Revenue Management with Limited Demand Information
Management Science
Optimal Pricing of Seasonal Products in the Presence of Forward-Looking Consumers
Manufacturing & Service Operations Management
The Role of Robust Optimization in Single-Leg Airline Revenue Management
Management Science
Toward Robust Revenue Management: Competitive Analysis of Online Booking
Operations Research
Buy Now and Match Later: Impact of Posterior Price Matching on Profit with Strategic Consumers
Manufacturing & Service Operations Management
Robust Controls for Network Revenue Management
Manufacturing & Service Operations Management
Testing the Validity of a Demand Model: An Operations Perspective
Manufacturing & Service Operations Management
Selling with Binding Reservations in the Presence of Strategic Consumers
Management Science
Strategic Capacity Rationing when Customers Learn
Manufacturing & Service Operations Management
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A growing segment of the revenue management and pricing literature assumes “strategic” customers who are forward-looking in their pursuit of utility. Recognizing that such behavior may not be directly observable by a seller, we examine the implications of seller uncertainty over strategic customer behavior in a markdown pricing setting. We assume that some proportion of customers purchase impulsively in the first period if the price is below their willingness to pay, while other customers strategically wait for lower prices in the second period. We consider a two-period selling season in which the seller knows the aggregate demand curve but not the proportion of customers behaving strategically. We show that a robust pricing policy that requires no knowledge of the extent of strategic behavior performs remarkably well. We extend our model to a setting with stochastic demand, and show that the robust pricing policy continues to perform well, particularly as capacity is loosened or the problem is scaled up. Our results underscore the need to recognize strategic behavior, but also suggest that in many cases effective performance is possible without precise knowledge of strategic behavior.