Should we opt for the Black Friday discounted price or wait until the Boxing Day?

TL;DR

This paper develops an optimal decision strategy for consumers facing timing choices during sales events like Black Friday and Boxing Day, balancing immediate discounts against potential future savings.

Contribution

It introduces a novel approach to the shopper's dilemma by applying principles from the two-envelope paradox to determine optimal timing for purchases.

Findings

Derived an explicit optimal strategy for timing purchases during sales periods.

Provided insights into minimizing expected loss in two-period decision scenarios.

Linked classical paradoxes to practical consumer decision-making.

Abstract

We derive an optimal strategy for minimizing the expected loss in the two-period economy when a pivotal decision needs to be made during the first time period and cannot be subsequently reversed. Our interest in the problem has been motivated by the classical shopper's dilemma during the Black Friday promotion period, and our solution crucially relies on the pioneering work of McDonnell and Abbott on the two-envelope paradox.