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Jack Phillips

Jack Phillips

2 years ago

Game theory provides a nice buzzword but in the current environment I do not see this providing any advantage over other repricers. Game theory relies on rational behavior of participants. The other players in Amazon’s BuyBox war are not playing a rational game. They do not follow the same rules. Additionally, the rules for obtaining the BuyBox (from what we can tell) rely on downward price pressure. The optimum price for any seller is along a demand curve at various prices against competition, setting a profitable floor price and the letting it increase incrementally to the optimal price (without competitive pressures) generates the best price, no game theory. Putting a profitable floor price allows the seller to not lose money while other sellers chase the BuyBox with money losing results.

Eli Engelberg

Eli Engelberg

2 years ago

Dear Jack, My name is Eli Engelberg and I am one of the Co-founders of Seller snap. I agree with you that Game Theory is a buzzword in so far as the idea of Game Theory Repricing is not an academic paper or a new economic theory. The intent was to use a well-known concept to explain how we tackle the challenge or repricing competitive products on Amazon. We believe that Amazon sellers ARE rational as far as their ultimate business goal which is to make more money. In Game Theory, a non-cooperative game involves two or more players in which each player is assumed to know the equilibrium strategies of the other players, and no player has anything to gain by changing only his own strategy. If each player has chosen a strategy and no player can benefit by changing strategies while the other players keep theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitutes a Nash equilibrium. To take this concept to the world of Amazon repricing, if my competitor’s strategy is to match my price (very common for sellers using rule based reprices), my strategy should be to sell at the highest price… Read more »

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