RFID-enabled item-level product information revelation

RFID-enabled item-level product information revelation

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Article ID: iaor200973382
Volume: 18
Issue: 6
Start Page Number: 570
End Page Number: 577
Publication Date: Dec 2009
Journal: European Journal of Information Systems
Authors: , ,
Keywords: game theory
Abstract:

We consider a homogeneous product market and the incentive for oligopolists to share item-level product information with their customers. Enabled by Radio Frequency Identification technology, each firm has the option to record and reveal item-level information of a proportion of its products. We consider a two-stage game where each firm first decides its production plan and then determines its level of information revelation. With a constant clearance discount rate, we derive pure strategy equilibria that are subgame perfect and demonstrate that complete information sharing is the unique Nash equilibrium for the game when the common demand is volatile and that no information revelation is the unique Nash equilibrium when demand is not volatile. Furthermore, we show that the Nash equilibrium is the same with a decreasing clearance discount rate and that neither complete information revelation nor zero information revelation is consistent with an equilibrium with an increasing discount rate. Results are similar in a duopoly non-homogeneous product market scenario.

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