Disruption, panic buying, and pricing: A comprehensive game-theoretic exploration

Date

2024-05-01

Author

Soltanzadeh, Shima
Rafiee, Majid
Weber, Gerhard Wilhelm

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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

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No one can cast a shadow on the disruption and customer buying behavior change, especially panic buying, as a result of it. Thus, designing scenarios to examine the influence of this situation on pricing decisions plays a pivotal role. This paper suggests new possible scenarios applying to disruption and panic buying situation. Three scenarios are proposed depending on the disruption, time of disruption, and panic buying. We employ an analytical game-theoretic approach to investigate substitute products pricing. The behavior of equilibrium market retail and wholesale prices is surveyed under different disruption and panic intensity levels. Also, we derive the optimal pricing strategy and ordering levels with disruption and time of it, product substitution, and panic buying. We present the figures and demonstrate the desired parameters can make a difference in measures rather than the scenario only. The results of our study can help operation managers to formulate efficient strategies to mitigate risks. Additionally, they can aid governments in handling unexpected customer behavior.

Subject Keywords

Customer behavior, Game theory, Panic buying, Supply chain management, Supply disruption

URI

https://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85185167589&origin=inward
https://hdl.handle.net/11511/108966

Collections

Graduate School of Applied Mathematics, Article