Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration
Manufacturers and consumers are boundedly rational and ultimately seek evolutionarily stable strategies through trial and error, imitation, and learning. It is important to study the pricing strategies of manufacturers and the purchasing channel decisions of consumers in the context of increasingly...
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MDPI AG
2025-01-01
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| Series: | Mathematics |
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| author | Shuang Zhang Yueping Du |
| author_facet | Shuang Zhang Yueping Du |
| author_sort | Shuang Zhang |
| collection | DOAJ |
| description | Manufacturers and consumers are boundedly rational and ultimately seek evolutionarily stable strategies through trial and error, imitation, and learning. It is important to study the pricing strategies of manufacturers and the purchasing channel decisions of consumers in the context of increasingly fierce competition in online channels, in addition to consumers’ loss aversion due to increasingly confusing promotional strategies; accordingly, in this paper, an evolutionary game including both parties is constructed, and the loss aversion factor from prospect theory is introduced. Based on data from Chinese media reports on the cosmetics industry, simulation and sensitivity analyses were conducted using Matlab R2024a. The results indicate that—in addition to channel services affecting the evolutionarily stable strategy for purchasing channel selection—a decrease in consumer loss aversion will help consumers reach the evolutionarily stable strategy faster. For manufacturers, channel services do not affect their evolution to a unified pricing strategy; however, when consumer loss aversion increases, manufacturers’ evolutionarily stable strategy will shift from a unified pricing strategy to a differentiated pricing strategy. |
| format | Article |
| id | doaj-art-a4fe3169f28d47c299465a55cead4cdd |
| institution | Kabale University |
| issn | 2227-7390 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Mathematics |
| spelling | doaj-art-a4fe3169f28d47c299465a55cead4cdd2025-01-24T13:39:50ZengMDPI AGMathematics2227-73902025-01-0113223410.3390/math13020234Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into ConsiderationShuang Zhang0Yueping Du1School of Economics and Management, Xidian University, Xi’an 710126, ChinaSchool of Economics and Management, Xidian University, Xi’an 710126, ChinaManufacturers and consumers are boundedly rational and ultimately seek evolutionarily stable strategies through trial and error, imitation, and learning. It is important to study the pricing strategies of manufacturers and the purchasing channel decisions of consumers in the context of increasingly fierce competition in online channels, in addition to consumers’ loss aversion due to increasingly confusing promotional strategies; accordingly, in this paper, an evolutionary game including both parties is constructed, and the loss aversion factor from prospect theory is introduced. Based on data from Chinese media reports on the cosmetics industry, simulation and sensitivity analyses were conducted using Matlab R2024a. The results indicate that—in addition to channel services affecting the evolutionarily stable strategy for purchasing channel selection—a decrease in consumer loss aversion will help consumers reach the evolutionarily stable strategy faster. For manufacturers, channel services do not affect their evolution to a unified pricing strategy; however, when consumer loss aversion increases, manufacturers’ evolutionarily stable strategy will shift from a unified pricing strategy to a differentiated pricing strategy.https://www.mdpi.com/2227-7390/13/2/234loss aversionprice strategyevolutionary gamedual channelHotelling |
| spellingShingle | Shuang Zhang Yueping Du Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration Mathematics loss aversion price strategy evolutionary game dual channel Hotelling |
| title | Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration |
| title_full | Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration |
| title_fullStr | Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration |
| title_full_unstemmed | Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration |
| title_short | Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration |
| title_sort | application of evolutionary game to analyze dual channel decisions taking consumer loss aversion into consideration |
| topic | loss aversion price strategy evolutionary game dual channel Hotelling |
| url | https://www.mdpi.com/2227-7390/13/2/234 |
| work_keys_str_mv | AT shuangzhang applicationofevolutionarygametoanalyzedualchanneldecisionstakingconsumerlossaversionintoconsideration AT yuepingdu applicationofevolutionarygametoanalyzedualchanneldecisionstakingconsumerlossaversionintoconsideration |