Simulation Study on Price Control Model with Multiplicative Reference Effect

Authors

Yang Hui, School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China;
Zhang Chen, School of Economics and Management, Nanjing University of Science and Technology, Nanjing 210094, China;

Abstract

Abstract: Considering customers' reference-dependent behavior, modeling and simulation study of the revenue management pricing problem with multiplicative reference effect was focused on, which defined the concept of multiplicative reference effect, described the characteristics of the reference effect function and the demand function with multiplicative reference effect, constructed the optimal control model with continuous time and continuous prices, proposed the Hamilton-Jacobi equation, provided simulation algorithm and designed simulation experiments to compare the pricing strategies under different demand circumstances. The simulation study shows that the reference effect has substantial impact on pricing paths and total revenues. The results provide management insights for enterprises to make pricing decisions under different market environments.

Recommended Citation

Hui, Yang and Chen, Zhang (2020) "Simulation Study on Price Control Model with Multiplicative Reference Effect," Journal of System Simulation: Vol. 29: Iss. 6, Article 24.
DOI: 10.16182/j.issn1004731x.joss.201706024
Available at: https://dc-china-simulation.researchcommons.org/journal/vol29/iss6/24

First Page

1337

Revised Date

2016-12-26

DOI Link

https://doi.org/10.16182/j.issn1004731x.joss.201706024

Last Page

1343

CLC

TP391.9

Recommended Citation

Yang Hui, Zhang Chen. Simulation Study on Price Control Model with Multiplicative Reference Effect[J]. Journal of System Simulation, 2017, 29(6): 1337-1343.

DOI

10.16182/j.issn1004731x.joss.201706024