Disruption, panic buying, and pricing: A comprehensive game-theoretic exploration

Soltanzadeh S., Rafiee M., Weber G.

Journal of Retailing and Consumer Services, vol.78, 2024 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 78
  • Publication Date: 2024
  • Doi Number: 10.1016/j.jretconser.2024.103733
  • Journal Name: Journal of Retailing and Consumer Services
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, Periodicals Index Online, Business Source Elite, Business Source Premier, CAB Abstracts, DIALNET
  • Keywords: Customer behavior, Game theory, Panic buying, Supply chain management, Supply disruption
  • Middle East Technical University Affiliated: Yes

Abstract

No one can cast a shadow on the disruption and customer buying behavior change, especially panic buying, as a result of it. Thus, designing scenarios to examine the influence of this situation on pricing decisions plays a pivotal role. This paper suggests new possible scenarios applying to disruption and panic buying situation. Three scenarios are proposed depending on the disruption, time of disruption, and panic buying. We employ an analytical game-theoretic approach to investigate substitute products pricing. The behavior of equilibrium market retail and wholesale prices is surveyed under different disruption and panic intensity levels. Also, we derive the optimal pricing strategy and ordering levels with disruption and time of it, product substitution, and panic buying. We present the figures and demonstrate the desired parameters can make a difference in measures rather than the scenario only. The results of our study can help operation managers to formulate efficient strategies to mitigate risks. Additionally, they can aid governments in handling unexpected customer behavior.