Period adding bifurcations in dynamic pricing processes

Lu, S; Oberst, S; Zhang, G; Luo, Z

Period adding bifurcations in dynamic pricing processes

Lu, S Oberst, S

Zhang, G

Luo, Z

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Publisher:: IEEE
Publication Type:: Conference Proceeding
Citation:: 2019 IEEE Conference on Computational Intelligence for Financial Engineering & Economics (CIFEr), 2019, pp. 71-76
Issue Date:: 2019-01-01

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Field	Value	Language
dc.contributor.author	Lu, S
dc.contributor.author	Oberst, S https://orcid.org/0000-0002-1388-2749
dc.contributor.author	Zhang, G https://orcid.org/0000-0003-4521-542X
dc.contributor.author	Luo, Z
dc.date	2019-05-04
dc.date.accessioned	2020-06-23T20:46:36Z
dc.date.available	2021-08-12T19:00:51Z
dc.date.issued	2019-01-01
dc.identifier.citation	2019 IEEE Conference on Computational Intelligence for Financial Engineering & Economics (CIFEr), 2019, pp. 71-76
dc.identifier.isbn	978-1-7281-0033-3
dc.identifier.issn	2380-8454
dc.identifier.issn	2640-7701
dc.identifier.uri	http://hdl.handle.net/10453/141641
dc.description.abstract	Price information enables consumers to anticipate a price and to make purchasing decisions based on their price expectations, which are critical for agents with pricing decisions or price regulations. A company with pricing decisions can aim to optimise the short-term or the long-term revenue, each of which leads to different pricing strategies thereby different price expectations. Two key ingredients play important roles in the choosing of the short-term or the long-term optimisation objectives: the maximal revenue and the robustness of the chosen pricing strategy against market volatility. However the robustness is rarely identified in a volatile market. Here, we investigate the robustness of optimal pricing strategies with the short-term or long-term optimisation objectives through the analysis of nonlinear dynamics of price expectations. Bifurcation diagrams and period diagrams are introduced to compare the change in dynamics of the optomal pricing strategies. Our results highlight that period adding bifurcations occur during the dynamic pricing processes studied. These bifurcations would challenge the robustness of an optimal pricing strategy. The consideration of the long-term revenue allows a company to charge a higher price, which in turn increases the revenue. However, the consideration of the short-term revenue can reduce the occurrence of period adding bifurcations, contributing to a robust pricing strategy. For a company, this strategy is a robust guarantee of optimal revenue in a volatile market; for consumers, this strategy avoids rapid changes in price and reduce their dissatisfaction of price variations.
dc.language	en
dc.publisher	IEEE
dc.relation.ispartof	2019 IEEE Conference on Computational Intelligence for Financial Engineering & Economics (CIFEr)
dc.relation.ispartof	IEEE Conference on Computational Intelligence for Financial Engineering & Economics
dc.relation.isbasedon	10.1109/CIFEr.2019.8759118
dc.rights	© 2019 IEEE. Personal use of this material is permitted. Permission from IEEE must be obtained for all other uses, in any current or future media, including reprinting/republishing this material for advertising or promotional purposes, creating new collective works, for resale or redistribution to servers or lists, or reuse of any copyrighted component of this work in other works.	en_US
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.title	Period adding bifurcations in dynamic pricing processes
dc.type	Conference Proceeding
utslib.location.activity	Shenzhen, China
pubs.organisational-group	/University of Technology Sydney/Faculty of Engineering and Information Technology
pubs.organisational-group	/University of Technology Sydney
utslib.copyright.status	open_access	*
pubs.consider-herdc	false
dc.date.updated	2020-06-23T20:46:30Z
pubs.finish-date	2019-05-05
pubs.place-of-publication	Piscataway, USA
pubs.publication-status	Published
pubs.start-date	2019-05-04
dc.location	Piscataway, USA

Abstract:

Price information enables consumers to anticipate a price and to make purchasing decisions based on their price expectations, which are critical for agents with pricing decisions or price regulations. A company with pricing decisions can aim to optimise the short-term or the long-term revenue, each of which leads to different pricing strategies thereby different price expectations. Two key ingredients play important roles in the choosing of the short-term or the long-term optimisation objectives: the maximal revenue and the robustness of the chosen pricing strategy against market volatility. However the robustness is rarely identified in a volatile market. Here, we investigate the robustness of optimal pricing strategies with the short-term or long-term optimisation objectives through the analysis of nonlinear dynamics of price expectations. Bifurcation diagrams and period diagrams are introduced to compare the change in dynamics of the optomal pricing strategies. Our results highlight that period adding bifurcations occur during the dynamic pricing processes studied. These bifurcations would challenge the robustness of an optimal pricing strategy. The consideration of the long-term revenue allows a company to charge a higher price, which in turn increases the revenue. However, the consideration of the short-term revenue can reduce the occurrence of period adding bifurcations, contributing to a robust pricing strategy. For a company, this strategy is a robust guarantee of optimal revenue in a volatile market; for consumers, this strategy avoids rapid changes in price and reduce their dissatisfaction of price variations.

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http://hdl.handle.net/10453/141641