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A one state variable partial differential equation which characterizes the price of European type Asian option is discussed.
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Microsoft characterized the price model as a simplification of what had become an overly complicated corporate pricing structure.
We characterize the pricing policies under two distinct decision criteria with multiple priors: (i) maximin utility and (ii) minimax regret.
Hedonic models characterize the pricing of differentiated goods, viewed as bundles of characteristics or attributes, and the demand and supply of those goods (attributes) under different assumptions about preferences and technology (Heckman et al. 2004).
To characterize the pool price during the two-hour horizon, the four price scenarios depicted in Fig. 5 are considered.
Lemma 3 characterizes the pair of prices ( (p_{BG},p_{i} ) ) that solves the problem defined in Eq. (19).
Among these 36 contracts, the four future contracts F 1,F 4,F 6,F 13 are used since their trading volumes and their impacts on the term structures are the most important (F 1 is the most liquid contract, F 13 characterizes the gap between prices over a one year period, F 4 and F 6 are intermediate future contracts that are mostly traded).
After characterizing the optimal pricing policies for each situation, the firm will choose the pricing policy yielding the highest expected profits.
Our goal is to characterize the equilibrium prices and the optimal level of the unhealthy attribute.
In section Methods we describe the model and characterize the optimal prices for the personalized treatment under perfect and asymmetric information.
Figure 5 characterizes the rationing regimes in terms of alternative price-wage combinations.
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