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Big Island, HI, USA
Jan. 6, 2005 to Jan. 6, 2005
ISBN: 0-7695-2268-8
pp: 176c
Ori Marom , University of Rochester, NY
Abraham Seidmann , University of Rochester, NY
ABSTRACT
We characterize an optimal scheme for the sale of multiple items of a good by a monopolist in a market comprised of risk averse buyers. It is established that by randomizing prices in one channel while also offering a risk-free alternative in another a seller may obtain segmentation benefits. The optimal vehicle of such price randomization is a draw from a discrete two-points probability distribution function. We use the model to offer explanations for observed on-line sellers' behavior and discuss implementation issues in view of recent e-commerce environments.
INDEX TERMS
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CITATION
Ori Marom, Abraham Seidmann, "A Model of Market Segmentation with Risk", HICSS, 2005, Proceedings of the 38th Annual Hawaii International Conference on System Sciences, Proceedings of the 38th Annual Hawaii International Conference on System Sciences 2005, pp. 176c, doi:10.1109/HICSS.2005.26
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