2020/2021

Оптимизация выручки и аукционы, ICEF Academia

Статус: Дисциплина общефакультетского пула

Кто читает: Международный институт экономики и финансов

Где читается: Международный институт экономики и финансов

Когда читается: 3, 4 модуль

Преподаватели: Суздальцев Алексей Игоревич

Язык: английский

Кредиты: 3

Контактные часы: 32

Course Syllabus

Abstract

How to sell goods and services optimally? How to set prices and decide what and to whom to sell? In this class, we will tackle this problem both from a theoretical and real-world perspective. First, we’ll review important models from economics — those of monopoly pricing and price discrimination — and reinterpret them using business terminology from real world. Then, we will study models that are not usually covered in microeconomics classes but are used extensively to set prices and optimize revenue in reality. These are models of so called Revenue Management that for more than 30 years help airlines, hotels and other firms to set prices and make decisions about good availability. These models capture important features of reality that are missing from the basic econ models — such as dynamic pricing and joint decisions about prices and inventory. We will discuss how one might estimate parameters of these models from data to use the models in practice. One way to sell a good is to conduct an auction. In the final part of the course, we’ll consider basics of Auction theory – the subject for which 3 Nobel Prizes in Economics (including the 2020 one) have been already awarded. There is an infinite number of ways to conduct an auction so how does one design optimal “rules of the game”? Prerequisites: It will be arguably hard to take this class if you are shaky in intermediate micro and undergraduate probability and statistics.

Learning Objectives

• To review basic model of monopoly pricing, price discrimination, and multi-product pricing from microeconomics
• To familiarize students with models of optimal pricing used in practice but not traditionally covered by courses in microeconomics
• To familiarize students with business terminology
• To give an overview of the basics of auction theory, one of the most practically successful areas of modern microeconomics

Expected Learning Outcomes

• apply key models of pricing from microeconomics
• apply basic models of Revenue management
• use business terminology related to pricing
• apply basic auction theory

Course Contents

• Introduction and background. Basics of pricing. Real-world issues when designing pricing strategies. Sins of cost-plus pricing. Economics vs. Business terminology.
• Price differentiation vs. price discrimination. Designing product lines. Customized pricing. Bundling.
• Introduction to airline and hotel revenue management. Basic models of optimal booking limits. Joint pricing and inventory decisions.
• Optimal dynamic pricing and markdowns. How should the price of an airline ticket optimally change over time?
• Forecasting and demand estimation for optimal pricing. Is it OK to estimate demand by Ordinary Least Squares?
• Basics of auctions. Revenue equivalence. Auctions vs. posted prices.
• Auctions as optimal selling procedures. Introduction to mechanism design. What was the 2020 Nobel Prize in Economics awarded for?
• Wrap-up and student presentations.

Assessment Elements

• Home Assignment
  Analytical problems based on models covered in class
• Final Exam
  Analytical problems based on models covered in class
• Student Group Presentation
  A 10-15 min presentation about how Revenue Management is done in practice in an industry of your choice that we didn’t cover in class (such as retail, rental car, passenger trains, etc.)

Interim Assessment

• Interim assessment (4 module)
  The grading formula is x = max{0.6xexam + 0.2xHA + 0.2xpres, 0.8xexam + 0.2xpres}, where x is the final grade, xexam is the exam grade, xHA is the home assignment grade, xpres is the grade for the presentation (graded in a very friendly way). Thus, a student grade is the maximum of two values: one takes into account the Home Assignment, and the other does not. Doing the Home Assignment is not necessary for getting a 10. You may choose to do it, to decrease the weight of the Final Exam, or may choose not to do it.

Bibliography

Recommended Core Bibliography

• Krishna, V. (2010). Auction Theory (Vol. 2nd ed). Burlington, MA: Academic Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=297062

Recommended Additional Bibliography

• Milgrom,Paul. (2004). Putting Auction Theory to Work. Cambridge University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.cup.cbooks.9780521536721