The Impact of Dynamic Pricing on Consumer Purchase Decisions: A Behavioral and Computational Study

Abstract

This study investigates the impact of dynamic pricing on consumer purchase decisions through a comprehensive analysis combining behavioral and computational approaches. Dynamic pricing, a strategy where prices fluctuate based on market demand, consumer behavior, and other variables, has become increasingly prevalent in digital marketplaces. This research aims to understand how dynamic pricing influences consumer buying patterns, perceived fairness, and overall satisfaction. Utilizing an agent-based modeling (ABM) framework, we simulate various dynamic pricing scenarios and analyze their effects on different consumer segments. Additionally, we conduct experiments to observe actual consumer responses to dynamic pricing in controlled settings. The findings reveal significant insights into the psychological and behavioral aspects of consumer decision-making under dynamic pricing conditions, providing valuable implications for businesses looking to optimize their pricing strategies. The study highlights the importance of balancing profitability with consumer trust and satisfaction, suggesting that transparent and adaptive pricing mechanisms can enhance market efficiency and customer loyalty.