Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration
Abstract
:1. Introduction
2. Literature Review
3. Research Methods
3.1. Model Descriptions and Assumptions
3.2. The Payoff for Each Player
3.2.1. Market Share and Profit Calculation Based on Consumer Loss Aversion and the Hotelling Model
3.2.2. The Payoff of the Evolutionary Game Between Manufacturers and Consumers
3.3. Solutions and Analysis of the Evolutionary Game
4. Results and Discussion
4.1. Simulation
4.2. Parameter Sensitivity Analysis
4.2.1. The Effect of Consumer Loss Aversion on Evolution
4.2.2. The Impact of Other Parameters on Evolution
4.3. Model Validation and Verification
5. Conclusions
5.1. Main Findings
5.2. Implications and Limitations
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Parameters | Descriptions |
---|---|
The product price for offline retail. | |
The product price for online retail. | |
The proportion of online consumers lost due to a price increase. | |
The product utility for offline retail. | |
The product utility for online retail. | |
The price discount for the online product, . | |
The quality discount for the online product, . | |
The consumer loss aversion coefficient. Consumers are more loss-averse when is larger. | |
T | The unit mismatch cost caused by choice. |
The service utility of offline retail. | |
The service utility of online retail. | |
R | Benefits to manufacturers caused by simplifying management, preventing price erosion issues, improving brand positioning, etc., when manufacturers choose a dual-channel unified pricing strategy and consumers tend to prefer an offline purchasing channel. |
M | Benefits to manufacturers caused by simplifying management, preventing price erosion issues, improving brand positioning, etc., when manufacturers choose a dual-channel unified pricing strategy and consumers tend to prefer an online purchasing channel. |
F | The increased cost to manufacturers caused by increased management for price erosion problems, the free-riding effect, etc., when manufacturers choose a dual-channel differential pricing strategy and consumers tend to prefer an offline purchasing channel. |
N | The increased cost to manufacturers caused by increased management for price erosion problems, the free-riding effect, etc., when manufacturers choose a dual-channel differential pricing strategy and consumers tend to prefer an online purchasing channel. |
x | The proportion of consumers choosing a dual-channel unified pricing strategy. |
y | The proportion of manufacturers choosing offline channels for purchase. |
The market share of offline retail. | |
The market share of online retail. | |
The total utility for consumers by buying the product offline. | |
The total utility for consumers by buying the product online. | |
The manufacturer’s profit when consumers buy the product offline. | |
The manufacturer’s profit when consumers buy the product online. | |
X | The marginal consumer with the same evaluations in the two channels. |
Manufacturer | Unified Pricing Strategy | Differentiated Pricing Strategy | |
---|---|---|---|
Consumer | y | ||
Offline channel | , | , | |
x | |||
Online channel | |||
Local Equilibrium Point | Sign of | Sign of | Results |
---|---|---|---|
ESS ➀ | |||
ESS ➁ | |||
ESS ➂ | |||
ESS ➃ | |||
0 | 0 | Saddle point |
Product Registration Number | Brand | Prices on Taobao | Sales on Taobao | Counter Prices in Shopping Malls |
---|---|---|---|---|
2024004383 | Lancome | 1120 | 60,000+ | 1120 |
2023001769 | LA MER | 1060 | 70,000+ | 1060 |
2022006890 | Clarins | 1030 | 20,000+ | 1030 |
2020003600 | Estee Lauder | 990 | 100,000+ | 990 |
2023000066 | Guerlain | 780 | 50,000+ | 780 |
2020007702 | SK-II | 610 | 100,000+ | 610 |
2024005718 | Lancome | 500 | 100,000+ | 500 |
2023006081 | Elizabeth Arden | 410 | 10,000+ | 410 |
2023009305 | Kiehl’s | 395 | 100,000+ | 395 |
2024000651 | Origins | 380 | 30,000+ | 380 |
2023005172 | L’oreal | 359 | 100,000+ | 370 |
2023001147 | PROYA | 349 | 500,000+ | 349 |
OLAY | 339 | 400,000+ | 339 | |
2022000473 | Winona | 338 | 100,000+ | 338 |
2023001593 | Clinique | 310 | 20,000+ | 310 |
Product Registration Number | Brand | Prices on Taobao | Sales on Taobao | Tag Price |
---|---|---|---|---|
N23101A01007 | NEELY | 339 | 16 | 339 |
BDS1MD1184 | broadcast | 798 | 5 | 798 |
JLFGM253 | jessie | 671 | 7 | 1499 |
JWCD31302 | JZ | 394 | 34 | 1580 |
5P1113980 | JNBY | 695 | 87 | 695 |
A3EEE3422 | PEACEBIRD | 599 | 1 | 599 |
1EA332241 | Eifini | 596 | 8 | 596 |
89124370104 | HOPESHOW | 449 | 9 | 449 |
3F8331781 | SEIFINI | 539 | 33 | 598 |
124420TC348 | LILY | 719 | 0 | 719 |
FR470034043 | FeiNiao&XinJiu | 899 | 0 | 899 |
LWT009177C0B | Lee | 629 | 26 | 629 |
S23483523 | sdeer | 549 | 6 | 599 |
C2EEE420439 | LEDiN | 499 | 17 | 499 |
112401102049 | H’s | 614 | 4 | 614 |
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Zhang, S.; Du, Y. Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration. Mathematics 2025, 13, 234. https://doi.org/10.3390/math13020234
Zhang S, Du Y. Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration. Mathematics. 2025; 13(2):234. https://doi.org/10.3390/math13020234
Chicago/Turabian StyleZhang, Shuang, and Yueping Du. 2025. "Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration" Mathematics 13, no. 2: 234. https://doi.org/10.3390/math13020234
APA StyleZhang, S., & Du, Y. (2025). Application of Evolutionary Game to Analyze Dual-Channel Decisions: Taking Consumer Loss Aversion into Consideration. Mathematics, 13(2), 234. https://doi.org/10.3390/math13020234