Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/37019 
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dc.contributor.authorMatzke, Christinaen
dc.contributor.authorWirth, Benedikten
dc.date.accessioned2009-06-30-
dc.date.accessioned2010-07-29T10:08:09Z-
dc.date.available2010-07-29T10:08:09Z-
dc.date.issued2009-
dc.identifier.urihttp://hdl.handle.net/10419/37019-
dc.description.abstractWe 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 investigate monopoly and competition between firms, described via an open-loop differential game which in this setting is equivalent to but analytically more convenient than a closed-loop system. We derive a Nash equilibrium and examine the influence of advertising. We show for the monopoly case that a reduction of the space of all price paths in time to the space of time-constant prices is sensible since the latter in general contains Nash equilibria. We prove that the equilibrium price of the weakest active firm tends to marginal cost as the number of (non-identical) firms grows. Our model is consistent with observed market behavior such as product life cycles.en
dc.language.isoengen
dc.publisher|aUniversity of Bonn, Bonn Graduate School of Economics (BGSE) |cBonnen
dc.relation.ispartofseries|aBonn Econ Discussion Papers |x3/2009en
dc.subject.jelC61en
dc.subject.jelC62en
dc.subject.jelC79en
dc.subject.jelL11en
dc.subject.jelL21en
dc.subject.jelM31en
dc.subject.jelM37en
dc.subject.ddc330en
dc.subject.keywordBounded rationalityen
dc.subject.keywordsocial learningen
dc.subject.keywordpopulation gameen
dc.subject.keyworddifferential gameen
dc.subject.keywordproduct life cycleen
dc.subject.keywordmonopolyen
dc.subject.keywordcompetitionen
dc.subject.keywordpricingen
dc.subject.keywordadvertisingen
dc.subject.stwPreistheorieen
dc.subject.stwMarktstrukturen
dc.subject.stwWettbewerben
dc.subject.stwBetriebliche Preispolitiken
dc.subject.stwWerbungen
dc.subject.stwSpieltheorieen
dc.subject.stwProduktlebenszyklusen
dc.subject.stwKonsumtheorieen
dc.subject.stwBeschränkte Rationalitäten
dc.subject.stwLernprozessen
dc.subject.stwTheorieen
dc.titleProduct Pricing when Demand Follows a Rule of Thumb-
dc.type|aWorking Paperen
dc.identifier.ppn603371086en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:bonedp:32009-

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