Dynamic pricing for perishable products by fuzzy decision

This paper develops a model of dynamic pricing when the consumers are heterogeneous in their valuation. In this model, there is a monopolist who sells a finite inventory over a finite time horizon. The seller adjusts prices dynamically in order to maximize the expected profit. Unlike the traditional research which states that the consumer make a purchasing decision if and only if he can get the greatest benefit, we introduce the notion of purchasing chance by a fuzzy function. While the seller maximizing the expected profit, the consumers seek to maximize the expected consumers´ surplus by choosing the right purchasing chance. We characterize the rational expectations (RE) equilibrium in this game. Finally, under the assumption of linear purchasing chance, the variational method provides us with a right dynamic pricing which implies many practical recommendations for the seller.