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2014 Product Demand Forecasting and Dynamic Pricing considering Consumers’ Mental Accounting and Peak-End Reference Effects
Wenjie Bi, Mengqi Liu
J. Appl. Math. 2014: 1-10 (2014). DOI: 10.1155/2014/139030

Abstract

We introduce a demand forecasting model for a monopolistic company selling products to consumers with double-entry mental accounting, which means consumers experience pleasure when consuming goods or service and feel pains when paying for them. Moreover, as the monopolist changes prices, consumers form a reference price that adjusts an anchoring standard based on the lowest price that they perceived, namely, the peak-end anchoring. We obtain the steady state prices under three different payment schemes for two- and infinite-period. We also analyze the relationship between these steady prices and maximal profit and compare the steady state prices of different payment schemes by changing the double-entry mental accounting’s parameters through numerical examples. The proposed model is computationally tractable for demand forecasting of realistic size.

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Wenjie Bi. Mengqi Liu. "Product Demand Forecasting and Dynamic Pricing considering Consumers’ Mental Accounting and Peak-End Reference Effects." J. Appl. Math. 2014 1 - 10, 2014. https://doi.org/10.1155/2014/139030

Information

Published: 2014
First available in Project Euclid: 27 February 2015

zbMATH: 07131347
Digital Object Identifier: 10.1155/2014/139030

Rights: Copyright © 2014 Hindawi

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