Pricing and Trust
نویسندگان
چکیده
We experimentally examine the effects of flexible and fixed prices in markets for experience goods in which demand is driven by trust. With flexible prices, we observe low prices and high quality in competitive (oligopolistic) markets, and high prices coupled with low quality in non-competitive (monopolistic) markets. We then introduce a regulated intermediate price above the oligopoly price and below the monopoly price. In monopolies volume increases and so does quality, such that overall efficiency is raised by 50%. Somewhat surprisingly, the same pattern emerges in oligopolies. In fact, across all market forms transaction volume and traded quality are maximal in regulated oligopolies.
منابع مشابه
Dynamic Targeted Pricing in B2B Relationships
W model the multifaceted impact of pricing decisions in business-to-business (B2B) relationships that are governed by trust. We show how a seller can develop optimal intertemporal targeted pricing strategies to maximize profits over time while taking into consideration the impact of pricing decisions on short-term profit margin, reference price formation, and long-term relationships. Our modeli...
متن کاملEnsuring Trust in One Time Exchanges: Solving the QoS Problem
We describe a pricing structure for the provision of IT services that ensures trust without requiring repeated interactions between service providers and users. It does so by offering a pricing structure that elicits truthful reporting of QoS by providers while making them profitable. This mechanism also induces truth-telling on the part of users reserving the service.
متن کاملA Dynamic Analysis of the Market for Wide-Bodied Commercial Aircraft
This paper uses an empirical dynamic oligopoly model of the commercial aircraft industry to analyse industry pricing, industry performance, and optimal industry policy. A novel feature of the model with respect to the previous literature is that entry, exit, prices, and quantities are endogenously determined in Markov perfect equilibrium (MPE). We find that many unusual aspects of the aircraft ...
متن کامل1 Client mistrust of advisers , products and markets by Keith Redhead
The purpose of this paper is to show that the problem of trust relates to all three levels of financial engagement by a retail investor. (1) Engagement with the adviser who advises on financial products. (2) Engagement with the financial institutions that produce the financial products. (3) Engagement with the stock markets in which the financial products are invested. It is proposed that these...
متن کاملThe study of defined buying factors affecting trust building and service performance in financial management systems
Thepurpose of this studywas to examinedefinedbuying factors affecting trust building and service performance in financialmanagement systems such as e-commerce.We conducted a study of 585 people in their 20–30 s who had experience with e-commerce websites and purchased fashion products from Oct. 1. to 30. 2010. The findings are summarized as follows. First, exploratory factor analysis was conduc...
متن کاملOn the Pricing of Recommendations and Recommending Strategically
If you recommend a product to me and I buy it, how much should you be paid by the seller? And if your sole interest is to maximize the amount paid to you by the seller for a sequence of recommendations, how should you recommend optimally if I become more inclined to ignore you with each irrelevant recommendation you make? Finding an answer to these questions is a key challenge in all forms of m...
متن کامل