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Treating Symmetric Buyers Asymmetrically

Author

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  • Shraman Banerjee

    (Department Of Economics, Shiv Nadar University)

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 implements 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

  • Shraman Banerjee, 2022. "Treating Symmetric Buyers Asymmetrically," Working Papers 2022-02, Shiv Nadar University, Department of Economics.
    • Handle: RePEc:alr:wpaper:2022-02
    as

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    File URL: https://repec.snu.edu.in/RePEc/alr/wpaper/DP_SNU-2022-02.pdf
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    References listed on IDEAS

    as
    1. Skreta, Vasiliki, 2015. "Optimal auction design under non-commitment," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 854-890.
    2. Johannes Hörner & Larry Samuelson, 2011. "Managing Strategic Buyers," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 379-425.
    3. Eric Maskin & John Riley, 2000. "Asymmetric Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 413-438.
    4. Hammond, Robert G., 2013. "A structural model of competing sellers: Auctions and posted prices," European Economic Review, Elsevier, vol. 60(C), pages 52-68.
    5. Chia-Hui Chen, 2012. "Name Your Own Price at Priceline.com: Strategic Bidding and Lockout Periods," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(4), pages 1341-1369.
    6. Liran Einav & Chiara Farronato & Jonathan D. Levin & Neel Sundaresan, 2013. "Sales Mechanisms in Online Markets: What Happened to Internet Auctions?," NBER Working Papers 19021, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dynamic Pricing; Asymmetric Mechanism.;

    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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