Preprint Article Version 1 This version is not peer-reviewed

Research on Retailer Pricing Based on Extended Regret Theory in E-commerce Environment

Ge Qiu *
Version 1 : Received: 1 November 2018 / Approved: 5 November 2018 / Online: 5 November 2018 (15:46:20 CET)

How to cite: Qiu, G. Research on Retailer Pricing Based on Extended Regret Theory in E-commerce Environment. Preprints 2018, 2018110125 (doi: 10.20944/preprints201811.0125.v1). Qiu, G. Research on Retailer Pricing Based on Extended Regret Theory in E-commerce Environment. Preprints 2018, 2018110125 (doi: 10.20944/preprints201811.0125.v1).

Abstract

Based on the Expected Utility Theory and Regret Theory, the Extended Regret Theory (ERT) is proposed in this paper to study the optimal pricing strategy of retailers in e-commerce environment. Taking the diversity of sales channels and the uncertainty of consumers in e-commerce environment into consideration, author of the paper designs an extended regret utility function which comprehensively considers both pessimistic and optimistic attitudes of decision makers in retailing industry to describe their regret-avoidance behavior. According to the sensitivity analysis, it is found that the optimal retail price decreases as the consumer price sensitivity coefficient increases, yet does not show variation with changes of the consumers pessimism degree. Moreover, the optimal retail price(s) obtained under EUT, ERT and combination of EUT and ERT represent the same.

Subject Areas

Retailers’ Optimal Pricing Strategy; Expected Utility Theory (EUT); Regret Theory; Regret Reference Point; Price-dependent Demand

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