This paper employs a dynamic optimal control model which is consistent in the explanation of optimal treatment (output) decision of the supplier and how the patients translate signal of advertising-like and reputation into expectation of quality and price. The supplier's advertising-like efforts in relation to the size of the service facility signal the level of price rather than quality. Since...

This paper analyzes competition in a two-period differentiated-products duopoly in the presence of both switching costs and network effects. Consumers are assumed to have rational expectation about network sizes, and future prices. The equilibrium prices in both periods are lower than markets with just switching costs and they decrease with the magnitude of network effects. Hence, in any period...

Antitrust scholars have argued that exclusive contracts have anticompetitive, or at best neutral effects, if no efficiencies are generated. In contrast, this paper shows that exclusive contracts can have procompetitive effects, provided buyers are imperfect downstream competitors and contract breach is feasible. In that case an efficient entrant is not necessarily foreclosed through exclusive c...

where the future cost f depends both on the decision u ∈ U as well as the outcome of uncertain events, represented by a random variable X ∈ X . Here the random variable X follows a distribution P which is assumed to be known in order to form the expectation in problem (1). Examples includes making an inventory decision with uncertainty future demand, purchasing stocks with uncertain information...

Participants of an experimental foreign exchange market forecast an exchange rate with an unknown price reaction function. Aggregate demand is derived from their own forecasts and random shocks. Our experimental results indicate that the expectations of the subjects tend to be coordinated on a common prediction strategy. This strategy is best described as a trendextrapolative, destabilizing exp...

Kusuoka [Limit Theorem on Option Replication Cost with Transaction Costs, Ann. Appl. Probab. 5, 198–221, (1995).] showed how to obtain non-trivial scaling limits of superreplication prices in discrete-time models of a single risky asset which is traded at properly scaled proportional transaction costs. This article extends the result to a multi-variate setup where the investor can trade in seve...

We consider a loss system with a fixed budget for servers. The system owner’s problem is choosing the price, and selecting the number and quality of the servers, in order to maximize profits, subject to a budget constraint. We solve the problem with identical and different service rates as well as with preemptive and non-preemptive policies. In addition, when the policy is preemptive we prove t...

This is to certify that the thesis/dissertation prepared By Entitled For the degree of Is approved by the final examining committee: Chair To the best of my knowledge and as understood by the student in the Research Integrity and Copyright Disclaimer (Graduate School Form 20), this thesis/dissertation adheres to the provisions of Purdue University's " Policy on Integrity in Research " and the u...

Group purchasing sites have recently gained tremendous popularity on the Internet. Besides the collective buying model, the leading website, Groupon.com, also introduces a tipping point mechanism to the U.S. e-market. The current study creates a theoretical model that integrates the theory of mind with models from e-commerce research to further study the buyer’s decision making influenced by a ...

The aim herein is to analyze utility-based prices and hedging strategies. The analysis is based on an explicitly solved example of a European claim written on a nontraded asset, in a model where risk preferences are exponential, and the traded and nontraded asset are diffusion processes with, respectively, lognormal and arbitrary dynamics. Our results show that a nonlinear pricing rule emerges ...