A consumer choice behavior model for the substitutable products

This paper deals with the choice behavior of consumers and behavior evolution on pricing policies for substitute products in stochastic environments. We divide all consumers into two types, namely the strategic type, and the myopic type. A strategic consumer will make a purchase through comprehensively utilizing the historical prices of the products and the current posted price from the seller, while a myopic consumer always purchases the product at the current price. Then we formulate an expected perceived price function that will be used as personal knowledge in the next price path choice, and investigate its properties. Finally, we develop the logit-based stochastic consumer choice model with an expected perceived price.