The posterior price matching policy, whereby a firm promises to reimburse the price difference to a customer who purchases a product before the firm marks it down, has been used in practice. The extensive literature has offered the following explanations why posterior price matching is adopted:...

Motivated by the recent practice, we study the advance selling strategy without showing the price (which may be coined as "probabilistic pricing"). We postulate that customers have boundedly rational expectations via anecdotal reasoning to anticipate the firm's pricing strategy. This bounded...

The recent literature argues that offering consumer returns, such as money-back guarantees (MBGs), reduces quality differentiation in competitive markets. We show that this argument does not hold in general. We propose a new certainty-equivalent approach, which shows that offering product...