Pricing Strategies of Advance Selling with Consumer Regret Aversion
The effect of consumer regret aversion on enterprise's pricing decisions in advance selling was studied and the optimal pricing strategies were derived by establishing the pricing models with different types of consumers of mark-down and mark-up advance selling strategies.The results indicate that consumer regret aversion has significant effects on the optimal pricing strategies and can mitigate the negative effects of consumer's strategic behavior on the profits of the enterprise.The type of consumers has an important influence on the optimal strategies and profits of the enterprise.If the consumers are narrow framing and have a low degree of regret aversion,the mark-down advance selling strategy is better.For narrow-framing type consumers with higher regret aversion,the enterprise will obtain the same profits under two strategies.However,if the consumers are portfolio framing,the mark-up advance selling strategy can bring higher profits.
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