A note on pricing with risk aversion

We consider the pricing problem of a risk-averse seller facing uncertain demand. Demand uncertainty stems from buyers’ valuations being privately observed. By imposing very mild restrictions on the distribution of buyers’ valuations (an increasing generalized failure rate distribution) and the Bernoulli utility function, we show that a risk-averse seller will unambiguously post a lower price than a risk-neutral counterpart.

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Year of publication:	2012
Authors:	Colombo, Luca ; Labrecciosa, Paola
Published in:	European Journal of Operational Research. - Elsevier, ISSN 0377-2217. - Vol. 216.2012, 1, p. 252-254
Publisher:	Elsevier
Subject:	Economics \| Pricing \| Risk management \| Utility theory

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010577589