Abstract
Pricing theory is a well-established mechanism that illustrates the constant push-and-pull of buyers versus consumers and the final semi-stable price that is found for a given good. Embedded in the theory of pricing is the theory of value. This chapter studies various pricing models and, in particular, how they are changed by the advances in artificial intelligence (AI). The first pricing model studied is game theory based pricing where agents interact with each other until they reach a Nash equilibrium price. Multi-agent systems are found to enhance this pricing model. The second is rational pricing and here when pricing the amount of arbitrage is minimized and AI is found to improve this model. The third is capital asset pricing model, which is also improved by the advent of evolutionary programming. Then the fourth is the Black-Scholes pricing model, which is impacted by the use of fuzzy logic to model volatility. The last one is the law of demand and supply, and it is found that the advent of AI within the context of online shopping infrastructure results in individualized pricing model.
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Marwala, T., Hurwitz, E. (2017). Pricing. In: Artificial Intelligence and Economic Theory: Skynet in the Market. Advanced Information and Knowledge Processing. Springer, Cham. https://doi.org/10.1007/978-3-319-66104-9_8
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DOI: https://doi.org/10.1007/978-3-319-66104-9_8
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