Week05_lecture - Information Systems and Analysis (ORIE...

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Week 5 (2/20-2/22) ORIE 311 1 Information Systems and Analysis (ORIE 311) Pricing Schemes for Information Goods II (Bundling and Sharing)
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Week 5 (2/20-2/22) ORIE 311 2 Homework HW 2 is due today (2/20) at NOON HW 3 is available on the course website (due at noon on Monday 2/27)
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Week 5 (2/20-2/22) ORIE 311 3 Bundling Probably one of the most important pricing techniques Note: Individual digital phone ~ $40. Individual Road Runner Service ~ $45. Standard + Digital Explorer Package (stand alone) >= $60
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Week 5 (2/20-2/22) ORIE 311 4 Bundling Any other examples? Under what circumstances will bundling yield higher profit?
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Week 5 (2/20-2/22) ORIE 311 5 Complementary Preferences Example 8.3
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Week 5 (2/20-2/22) ORIE 311 6 No Bundling (Example 8.4)
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Week 5 (2/20-2/22) ORIE 311 7 Averaging Assume that we have a large number of products Ex: Large collection of articles Claim: People frequently purchase more items when bundled than they would buy if sold separately, even at the same unit cost! How is that possible? Example: Magazine/Newspaper subscriptions are bundles of written articles that people purchase in great volume
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Week 5 (2/20-2/22) ORIE 311 8 Averaging Analysis I
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Week05_lecture - Information Systems and Analysis (ORIE...

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