We study firms that sell multiple substitutable products and customers whose purchase behavior follows a Nested Logit model, of which the Multinomial Logit model is a special case. Customers make purchasing decision sequentially under the Nested Logit model: they first select a nest of products...

Frequent technological innovations and price declines adversely affect sales of extended warranties as product replacement upon failure becomes an increasingly attractive alternative. To increase sales and profitability, we propose offering flexible-duration extended warranties. These warranties...

Traditional one-price-for-all extended warranties do not differentiate customers according to their risk attitudes, usage rates or operating environment. These warranties are priced to cover the cost of high usage customers who experience more failures and are willing to pay a risk premium for...

This paper studies pricing and assortment management for cross-category products, a common practice in brick-and-mortar retailing and e-tailing. We investigate the complementarity effects between the main products and the secondary products, in addition to the substitution effects for products...

This paper investigates the threshold effects on the consideration set formation for consumers and the associated pricing decisions for firms. In the class of random utility maximization choice models, consumers choose the alternative with the largest utility after resolving utility...

In this paper, we develop an integrated framework to study a firm's joint decisions on product price, quality and service duration in a variety of monopolistic and competitive scenarios. Product price, quality, and ancillary service (such as maintenance and factory warranty) are arguably among...

We consider an assortment and price optimization problem where a retailer chooses an assortment of competing products and determines their prices to maximize the total expected profit subject to a capacity constraint. Customers' purchase behavior follows the multinomial logit choice model with...

We consider an assortment optimization problem where a retailer chooses a set of substitutable products to maximize the total expected revenue or profit subject to a capacity constraint. The customer purchase behavior follows the generalized attraction model (GAM), of which the multinomial logit...

Consumers search for product information to resolve valuation uncertainties before purchase. We incorporate search cost into consumer choice models and study the two-stage consider-then-choose policy. In the first stage, a consumer forms her consideration set by balancing utility uncertainty and...

Problem Definition: Reference prices arise as price expectations against which consumers evaluate products in their purchase scenarios. We investigate what will happen when prospect theory (e.g., reference prices) meets consumer choice models from the perspectives of both the consumers and the...