Dynamic Pricing of Fashion-Like Multiproducts with Customers’ Reference Effect and Limited Memory

Figure 1

Optimal price path for store-level reference price and product-level reference price (𝐷₁(𝑝₁,𝑝₂,𝑟)=40−0.5𝑝₁+20∗𝜆₁(𝑟−𝜆₁𝑝₁−𝜆₂𝑝₂), 𝐷₂(𝑝₁,𝑝₂,𝑟)=40−0.5𝑝₂+20∗𝜆₂(𝑟−𝜆₁𝑝₁−𝜆₂𝑝₂),𝑟₀=10, 𝛼=0.2,𝛾=0.95).

(a)

(b)