Wesley R. Hartmann

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Information versus Automation and Implications for Dynamic Pricing

by Bryan K. Bollinger, Wesley R. Hartmannvia IP2 Working Paper Series
Wednesday, October 24, 2018

Essential resources like electricity and water can experience rapidly changing demand or supply while the other side of the market is unchanged. Short-run price variation could efficiently allocate resources at these critical times, but only if consumers exhibit short-run demand elasticity. The question for firms in these markets has always been how to enable this response. Randomized control trials are increasingly used to test dynamic pricing and technologies that can assist in response by providing information and/or automated response.