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In this paper, we study the relationship between several well known classes of discrete choice models, i.e., the random utility model (RUM), the representative agent model (RAM), and the semiparametric choice model (SCM). Using a welfare-based model as an intermediate, we show that the RAM and the SCM are equivalent. Furthermore, we show that both models as well as the welfare-based model strictly subsume the RUM when there are three or more alternatives, while the four are equivalent when there are only two alternatives. Thus, this paper presents a complete picture of the relationship between these choice models. Funding: The research of the third author is supported by the National Science Foundation [Grant CMMI-1462676]. Keywords: welfare function * random utility model * representative agent model * semiparametric choice model, 1. Introduction In this paper, we study the discrete choice models. Discrete choice models are used to model choices made by people among a finite set of alternatives. As examples, [...]

We consider a seller's problem of determining revenue-maximizing prices for an assortment of products that exhibit network effects. Customers make purchase decisions according to a multinomial logit choice model, modified--to incorporate network effects--so that the utility each individual customer gains from purchasing a particular product depends on the market's total consumption of that product. In the setting of homogeneous products, we show that if the network effect is comparatively weak, then the optimal pricing decision of the seller is to set identical prices for all products. However, if the network effect is strong, then the optimal pricing decision is to set the price of one product low and to set the prices of all other products to a single high value. This boosts the sales of the single low-price product in comparison to the sales of all other products. We also obtain comparative statics results that describe how optimal prices and sales levels vary with a parameter that determines the strength of the network effects. We extend our analysis to settings with heterogeneous products and establish that optimal solutions have a structure similar to that found in the homogeneous case: either maintain a semblance of balance among all products or boost the sales of just one product. Based on this structure, we propose an effective computational algorithm for such general heterogeneous settings. Keywords: pricing; choice models; network effects; revenue management. Subject classifications: marketing: choice models, pricing. Area of review: Operations and Supply Chains. History: Received July 2014; revision(s) received March 2015, October 2015; accepted December 2015. Published online in Articles in Advance March 25, 2016., 1. Introduction A product is said to exhibit network effects if individual consumers value it more when more other consumers purchase it. For example, in multiplayer online video games, individuals [...]

We consider the dynamic pricing problem a monopolistic seller faces when customers arrive in heterogeneous time periods and their purchase decisions are affected by reference prices formed from their past [...]

A natural optimization model that formulates many online resource allocation problems is the online linear programming (LP) problem in which the constraint matrix is revealed column by column along with [...]

We consider a retailer selling a single product with limited on-hand inventory over a finite selling season. Customer demand arrives according to a Poisson process, the rate of which is [...]

Recently, coinciding with and perhaps driving the increased popularity of prediction markets, several novel pari-mutuel mechanisms have been developed such as the logarithmic market-scoring rule (LMSR), the cost-function formulation of [...]