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2014 47th Hawaii International Conference on System Sciences (2005)
Big Island, Hawaii
Jan. 3, 2005 to Jan. 6, 2005
ISSN: 1530-1605
ISBN: 0-7695-2268-8
pp: 176c
Abraham Seidmann , University of Rochester, NY
Ori Marom , University of Rochester, NY
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.
Abraham Seidmann, Ori Marom, "A Model of Market Segmentation with Risk", 2014 47th Hawaii International Conference on System Sciences, vol. 07, no. , pp. 176c, 2005, doi:10.1109/HICSS.2005.26
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