Strategic pricing games
Emily Law
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Professor John R. Birge
A renowned scholar in operations management delivered a distinguished lecture held by the Institute for Advanced Study at City University of Hong Kong on 15 December.
The lecture titled “Dynamic Learning in Strategic Pricing Games” was conducted by Professor John R. Birge, the Jerry W. and Carol Lee Levin Professor of Operations Management at the University of Chicago Booth School of Business. The lecture was co-organised with The Chinese University of Hong Kong, The Hong Kong University of Science and Technology and The University of Hong Kong.
In the monopoly pricing situation, firms optimally vary prices to learn that demand and variation must be sufficiently high to ensure complete asymptotic learning, according to Professor Birge.
He discussed how much optimal equilibrium strategies with competition could differ from optimal monopolistic pricing strategies. He also pointed out that firms may prefer not to experiment with prices, particularly for new products if they are complements or substitutes in dynamic pricing.
In conclusion, Professor Birge said that simple best-response policies with noisy adjustments could yield efficient learning as in monopolistic pricing. He added that policies restricting price adjustments could also reduce consumer value.
Professor Birge was Dean of the McCormick School of Engineering and Applied Science and Professor of Industrial Engineering and Management Sciences at Northwestern University. His honours and awards include the IIE Medallion Award, the INFORMS Fellows Award, the MSOM Society Distinguished Fellow Award and the Harold W. Kuhn Prize.
The lecture titled “Dynamic Learning in Strategic Pricing Games” was conducted by Professor John R. Birge, the Jerry W. and Carol Lee Levin Professor of Operations Management at the University of Chicago Booth School of Business. The lecture was co-organised with The Chinese University of Hong Kong, The Hong Kong University of Science and Technology and The University of Hong Kong.
In the monopoly pricing situation, firms optimally vary prices to learn that demand and variation must be sufficiently high to ensure complete asymptotic learning, according to Professor Birge.
He discussed how much optimal equilibrium strategies with competition could differ from optimal monopolistic pricing strategies. He also pointed out that firms may prefer not to experiment with prices, particularly for new products if they are complements or substitutes in dynamic pricing.
In conclusion, Professor Birge said that simple best-response policies with noisy adjustments could yield efficient learning as in monopolistic pricing. He added that policies restricting price adjustments could also reduce consumer value.
Professor Birge was Dean of the McCormick School of Engineering and Applied Science and Professor of Industrial Engineering and Management Sciences at Northwestern University. His honours and awards include the IIE Medallion Award, the INFORMS Fellows Award, the MSOM Society Distinguished Fellow Award and the Harold W. Kuhn Prize.