Competitive dynamic pricing with alternating offers: Theory and experiment

We propose an equilibrium model of duopolistic dynamic pricing in which a buyer alternates between two sellers for price offers over a finite time horizon. The game ends when the buyer accepts a price offer or the selling season is over, whichever comes first. Previous research (Granot et al., 2007) shows that there are successive markdowns in equilibrium when the buyer is commonly known to be myopic; our analysis suggests that when she is known...