Impact of strategic customer behavior breadth on profit in revenue management

This paper studies the impact of strategic customer behavior breadth on seller's profit. The paper considers a seller that sells a product over two periods during the selling season with the presence of strategic customers. By solving the rational expectation equilibrium between the seller and the customers, the paper studies the pricing and inventory decision of the seller. Results show that the seller should make their decisions according to the strategic customer behavior breadth. Many factors are involved in determining the turning point of strategic customer behavior breadth, but the seller may resort to high full-price at the beginning of the selling season in most cases.