Dynamic Pricing with Limited Commitment
Martino Banchio, Frank Yang

TL;DR
This paper analyzes a monopolist's dynamic pricing problem with limited commitment, showing that equilibrium revenue cannot exceed that of pre-committed pricing, regardless of consumer information persistence.
Contribution
It demonstrates that in a dynamic setting with evolving private information, limited commitment restricts revenue to pre-committed levels, even with persistent consumer information.
Findings
Equilibrium revenue is capped at pre-committed pricing levels.
Persistence of consumer information does not increase seller revenue.
D1 refinement ensures no revenue gain from dynamic pricing strategies.
Abstract
A monopolist wants to sell one item per period to a consumer with evolving and persistent private information. The seller sets a price each period depending on the history so far, but cannot commit to future prices. We show that, regardless of the degree of persistence, any equilibrium under a D1-style refinement gives the seller revenue no higher than what she would get from posting all prices in advance.
Peer Reviews
No public reviews on file for this paper yet. If you reviewed it on a platform where reviews are public (OpenReview, ICLR, NeurIPS, ICML), you can paste yours below so the community can read it here.
Videos
No videos yet. Explain this paper in a talk, walkthrough, or lecture? Add one.
Taxonomy
TopicsAuction Theory and Applications · Digital Platforms and Economics · Consumer Market Behavior and Pricing
