Lost in Transit: Product Replacement Bias and Pricing to Market
نویسندگان
چکیده
We assume that product i has a constant hazard of adjusting, fi, in each month, where fi ∼ Beta(a, b). Let us denote the product’s lifetime by ni. These assumptions imply that the total number of price changes in a product’s lifetime is distributed according to the binomial distribution, xi ∼ Bin(ni, fi). We assume, furthermore, that fi is distributed according to the beta distribution, fi ∼ Beta(a, b). Given this model, we can write the likelihood of observing a product with length ni and the total number of price changes xi as,
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