Sequential Learning Of Profit Maximizing Sales Prices

Abstract

Sellers are interested in selling their products for the profit maximizing price. Often, this price is set based on an examination of the cost function of the product (Nagle, 2011), or it is based on market research querying customers price sensitivities for the offered product (E.g., Rao, 1984). Researchers trying to estimate profit maximizing sales prices have also focussed on setting prices in competitive markets using a game theoretic approach (See, e.g., Jiang et al., 2011).