Stochastic Optimal Control Models for Online Stores
Year: 2011
Type: preprint
Abstract: We present a model for the optimal design of an online auction/store by a seller. The framework we use is a stochastic optimal control problem. In our setting, the seller wishes to maximize her average wealth level, where she can control her price per unit via her reputation level. The corresponding Hamilton-Jacobi-Bellmann equation is analyzed for an introductory case. We then turn to an empirically justified model, and present introductory analysis. In both cases, pulsing advertising strategies are recovered for resource allocation. Further numerical and functional analysis will appear shortly.
Source: arXiv (Cornell University)
Authors: Milan Bradonjić, Albert Cohen
Institution: Los Alamos National Laboratory
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W14123051