Dynamic Learning in Markets: Pricing, Advertising, and Information Acquisition

dc.contributor.author Weber, Thomas
dc.date.accessioned 2019-01-03T00:51:20Z
dc.date.available 2019-01-03T00:51:20Z
dc.date.issued 2019-01-08
dc.description.abstract In the face of demand uncertainty, a monopolist can observe sales as a controlled reaction to its price and advertising so as to improve the choice of this marketing mix in the future. Furthermore, to upgrade its knowledge about demand the firm has the option to invest in external market intelligence and thus to directly acquire relevant information. Using a two-period model we determine the firm's profit-maximizing learning strategy using all three of these levers: price, advertising, and information acquisition. This illustrates the firm's tradeoff of actively managing its consumer base through costly marketing, exploiting expected demand through pricing, and increasing the efficiency of its actions by means of costly outside information. An extension of the model to the case with internal budget constraints on information acquisition is provided, and a numerical example is discussed.
dc.format.extent 10 pages
dc.identifier.doi 10.24251/HICSS.2019.794
dc.identifier.isbn 978-0-9981331-2-6
dc.identifier.uri http://hdl.handle.net/10125/60097
dc.language.iso eng
dc.relation.ispartof Proceedings of the 52nd Hawaii International Conference on System Sciences
dc.rights Attribution-NonCommercial-NoDerivatives 4.0 International
dc.rights.uri https://creativecommons.org/licenses/by-nc-nd/4.0/
dc.subject Strategy, Information, Technology, Economics, and Strategy (SITES)
dc.subject Organizational Systems and Technology
dc.subject Advertising, Information Acquisition, Learning, Pricing
dc.title Dynamic Learning in Markets: Pricing, Advertising, and Information Acquisition
dc.type Conference Paper
dc.type.dcmi Text
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