We analyze a dynamic pricing problem where consumer's purchase decisions are a ected by representative past prices, summarized in a reference price. We propose a new, behaviorally motivated reference price mechanism, based on the peak-end memory model proposed by Kahneman et al. (1993). Speci...

Frequent sales are a characteristic of the modern retail industry despite their significant implementation costs and potential to erode consumers' price expectations. One reason for this is that consumers enjoy looking forward to sales. We model the purchase behavior of "emotionally rational"...

Frequent sales are a characteristic of the modern retail industry despite their significant implementation costs and potential to erode consumers' price expectations. One reason for this is that consumers enjoy looking forward to sales. We model the purchase behavior of "emotionally rational"...