Research On Retailer's Advance Selling Strategy Based On Expected Utility Theory And Proespect Theory

As a great innovation in the age of the Internet marketing,selling products in advance is gradually being used by more and more businesses.Concerning the sale of some influential perishable products,partial businessmen choose premium sales in the advance selling period.In view of this phenomenon,this article from the retailer's point of view,choose the premium advance selling e products to research.The traditional expected utility theory is based on the characteristics of "rational actor" to describe the behavior of individual decision-making,which describes the individual's long-term decision-making behavior is significant,but in reality,people are not completely rational,the prospect theory can describes the individual's decisionmaking behavior more closer to reality,the two theories complement each other.Therefore,based on the existing research,this paper consummates the advance selling decision-making model based on the expectant utility theory,and makes the advance selling decision model based on the prospect theory,which is based on the consumer's strategic purchase behavior,demand diffusion effect,residual value and out-of-stock loss,and through numerical examples to discuss the effects of the proportion of strategic consumers,demand diffusion effect,residual value and out-of-stock losses and other factors on retailer's optimal advance selling strategy respectively.The results show that under the framework of expected utility theory,the optimal advance selling price of retailers is a non-increasing function of the proportion of strategic consumers and the diffusion coefficient of demand.It is not always optimal to reduce the advance selling price to increase the amount of pre-sales when the demand diffusion effect is positive.When the proportion of strategic consumers is high in the market,the optimal order quantity of the retailer may decrease as the product diffusion effect increasing.The change of residual value and out-of-stock loss has no significant effect on retailer's optimal advance selling price,but the optimal order quantity will increase with the increase of both.Under the framework of prospect theory,the optimal advance selling strategy is a complex decision-making process,not only impacts from the proportion of strategic consumers,the demand diffusion effect,residual value,stock losses,but also impacts from the retailer's psychological expectations,risk attitudes and other aspects of the role.In addition,through the comparative analysis,we find that retailer's optimal advance selling strategies with some parameters' change under the two theories have a certain consistency.