Providers of free-to-play games often gain revenue by monetizing players' playtime, e.g., through ingame advertising, and by selling premium module of the game. One emerging strategy to sell the premium module, known as the virtual selling strategy, is to set the module price based on an amount...

This paper examines how data-driven personalized decisions can be made while preserving consumer privacy. Our setting is one in which the firm chooses a personalized price based on each new customer's vector of individual features; the true set of individual demand-generating parameters is...

The development of Internet brought in revolutions in pricing models in the digital music industry. Currently, there are three common schemes to sell digital music: ownership, subscription and mixed pricing models. Our paper aims to explore and compare the three pricing models. Through a...

Consumer review systems have become an important marketing communication tool through which consumers share and learn product information. Although there is abundant evidence that consumer reviews have significant impact on product sales, the design of consumer review systems and its impact on...

The increasing pervasiveness of social networks allows users to share purchase behaviors with their online friends. In the present study, we examine optimal pricing strategies of a monopolistic firm using an analytical model that accounts for behavioral observational learning in social networks....

The recent developments in information technology (IT) have enabled firms to employ personalized pricing. Should all firms employ personalized pricing even though the adaptation costs of such pricing strategies are not high? This paper theoretically demonstrates a situation in which all firms do...

In this paper we estimate and empirically test different behavioral theories of consumer reference price formation. Two major theories are proposed to model the reference price reaction: assimilation contrast theory and prospect theory. We assume that different consumer segments will use...

In times of increasing oil prices and a weak dollar, European companies that focus their business on the US market may find themselves in a weak position. While many businesses can hedge this kind of risk by relocating production to the US, or employing financial remedies, these strategies may...

We analyze the strategic behavior of firms when demand is determined by a rule of thumb behavior of consumers. We assume consumer dynamics where individual consumers follow simple behavioral decision rules governed by imitation and habit as suggested in consumer research. On this basis, we...