英语论文资料ACTIVELY LEARNING BY PRICING A MODEL OF AN EXPERIMENTING SELLER.pdf

ISSN 1471-0498 DEPARTMENT OF ECONOMICS DISCUSSION PAPER SERIES ACTIVELY LEARNING BY PRICING: A MODEL OF AN EXPERIMENTING SELLER Tim Willems Number 687 December 2013 Revised February 2014 Manor Road Building, Manor Road, Oxford OX1 3UQ Actively Learning by Pricing: A Model of an Experimenting Seller Tim Willemsy January 28, 2014 Abstract This paper presents a model of a rational seller who is actively learning the slope of his demand curve via his pricing strategy. Consequently, this seller optimally experiments with his price. Resulting price patterns show a lot of discreteness (as observed in the data), which has proved to be a major challenge to most price setting models. The modelís learning dynamics are able to reconcile individual price áexibility with aggregate price sluggishness, while the experimentation motive can explain the presence of many idiosyncratic price changes in the data as well as the observation that prices are more volatile than costs. JEL-classiÖcation: D21, D83, E31 Key words : Active learning, Price experimentation, Nominal rigidities, Sales, Discrete pricing 1 Introduction This paper investigates the extent to which the active learning motive of a seller who faces uncertainty on the slope of his demand curve can reconcile the volatile, discrete pattern followed by individual prices, with the sluggishness observed in the aggregate price level. I am especially grate