Research On Pricing Decision Based On Consumer Overconfidence

Consumers' purchasing behavior is an important basis for retailers' pricing decisions.At present,consumers have more and more channels to obtain product information,and they can continuously master retailers' historical pricing through technological development,which makes consumers become more and more shrewd in purchasing decisions and reduce their reckless consumption.At the same time,influenced by individual psychological preference,economic status,external environment and other factors,consumers will have cognitive bias in the purchase process.At the same time,retailers do not show absolute rationality in the face of complex market environment,and prospect theory describes the psychological behavior of general agents when making decisions.Based on the domestic and foreign research results on consumer strategic overconfidence consumer and dynamic pricing of retailers,the thesis aims to study the pricing problem of retailers based on overconfidence consumers by building a mathematical model under the framework of prospect theory.Firstly,by constructing the retailer's prospective profit model,it illustrates that in the monopolized market,the two-stage product pricing problem is considered when a single enterprise faces overconfident consumers in the market.The research conclusion shows that: because overconfident consumers are more inclined to buy at a low price,enterprises will choose to lower prices to attract this part of consumers to buy.At the same time,retailers are loss-averse.With the increase of their loss aversion coefficient,retailers reduce prices to attract consumers to avoid losses.The reference profit of retailers also has an important influence on their pricing strategy and prospective profit.Secondly,in the late stage of sales,innovative competitive enterprises enter the market to compete with incumbent enterprises,we study the optimal pricing decision of incumbent enterprises,and it is illustrated that the influence of the entry of competitors on the decision-making of incumbent enterprises by numerical examples.The conclusion shows that the entry of competitors leads to the price reduction of incumbent enterprises.With the improvement of product innovation level of competing enterprises,the price reduction of incumbent enterprises is promoted.When the number of overconfident consumers in the market is increasing,the overconfident consumers are more sensitive to the price reduction of enterprises,so the price reduction of incumbent enterprises increases first and then decreases compared with that of the monopolized market.However,with the increase of overconfident consumers,the improvement of the future profit of incumbent enterprises is slower.The increase in the degree of loss aversion of incumbent enterprises will expand their price reduction range compared with the monopolized market.The entry of competitors will make incumbent enterprises feel the loss more directly.Incumbent enterprises choose to further reduce prices to compete for the market.At the same time,compared with the monopolized market,the prospective profits of incumbents decrease more with the enhancement of their loss aversion.