Minimum Advertised-Price Policy Rules and Retailer Behavior: An Experiment by Hewlett-Packard

Abstract

We tested the effects of various of policy rules on retailer behavior in laboratory experiments conducted at Hewlett-Packard Laboratories. Our experimental design models the multifaceted contemporary market for consumer computer products and is quite complex, but we found that participants can make effective decisions and that their behavior is sensitive to variations in policies. Based on our results, HewlettPackard changed its policies; for example, it made the consequences for violations forward-looking as well as backward-looking). This line of research appears promising for complex industrial environments.

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