Rutgers University,

Center for Information Management,
Integration and Connectivity (CIMIC)

Friday, March 12, 10:00 - 12:00pm

Room: Ackerson Hall - 200J

Title: Electronic Commerce: Variable or Adaptive Pricing on the Internet

Speaker: Prof. Paul B. Kantor

SCILS, Rutgers

Modern discussions of the Internet often mention that with the Internet, each customer can become a market of size one. More generally, even without an attendant invasion of privacy, the Internet makes it possible to gain information about a customer's reserve price, through offering constantly varying prices to randomly selected customers. This suggests that it may be possible to rapidly find the optimum price for a given configuration of demand, and to rapidly recognize when a change in demand has occurred. We report on some analytical results, and some Monte Carlo simulations, suggesting that it is possible to get rather good performance under this model, with surprisingly small samples (well under 100 test cases). Detailed results are presented for the case of linear dependence of demand on the price, and the extension to the more realistic case of normal distribution of reserve price is discussed. In related work, we find that the raw arrival rate of customers is not predictable enough to permit us to use variations in the arrival rate as a surrogate for willingness to pay. We discuss on the implications of these results for doing business in the online environment.

Paul Kantor is Professor of Information Science in the Department of Library and Information Science at SCILS Rutgers. He directs the Rutgers Distributed Laboratory for Digital Libraries, a multi-disciplinary collaboration, and conducts research on problems associated with information finding in networked environments, and with the economic aspects of such networks.



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