Technical Note—Optimizing Risk-Balancing Return Under Discrete Choice Models
研究了企业如何根据风险厌恶程度调整定价策略，以平衡预期回报与收入或利润风险，发现风险厌恶导致企业降价并减少价格差异化。
Similar to individual investors, firms balance revenue or profit risk with the expected return on investment. A stable cash flow is required to satisfy private and public shareholders or to maintain solvency. Product prices impact both the expected demand for the products and the volatility of the demand, and consequently a firm’s revenue or profit risk. This paper presents models and results that demonstrate how risk sensitivity can inform pricing strategy. The authors show that a firm’s distaste for risk not only causes the firm to discount its products in exchange for lower profit volatility, but also reduces the firm’s incentive to price differentiate among the products. The findings also provide insight into how firms with varying degrees of risk aversion may price products of different quality and how this pricing strategy affects product market share.