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A Calvo contract is the name given in macroeconomics to the pricing model that when a firm sets a nominal price there is a constant probability that a firm might be able to reset its price which is independent of the time since the price was last reset. The model was first put forward by Guillermo Calvo in his 1983 article "Staggered Prices in ...
The Taylor contract came as a response to results of new classical macroeconomics, in particular the policy-ineffectiveness proposition proposed in 1975 by Thomas J. Sargent and Neil Wallace [3] based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy and that monetary shocks can only give ...
Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions. [2] Pricing strategies determine the price companies set for their products. The price can be set to maximize profitability for ...
Calculating option prices, and their "Greeks", i.e. sensitivities, combines: (i) a model of the underlying price behavior, or "process" - i.e. the asset pricing model selected, with its parameters having been calibrated to observed prices; and (ii) a mathematical method which returns the premium (or sensitivity) as the expected value of option ...
Bayesian-optimal pricing (BO pricing) is a kind of algorithmic pricing in which a seller determines the sell-prices based on probabilistic assumptions on the valuations of the buyers. It is a simple kind of a Bayesian-optimal mechanism , in which the price is determined in advance without collecting actual buyers' bids.
Cost-plus pricing is the most basic method of pricing. A store will simply charge consumers the cost required to produce a product plus a predetermined amount of profit. Cost-plus pricing is simple to execute, but it only considers internal information when setting the price and does not factor in external influencers like market reactions, the weather, or changes in consumer va
The European Commission addressed dynamic pricing last year, saying it was aware and “monitoring the situation.” The EU executive arm said “imposition of excessive prices by a dominant ...
Heath–Jarrow–Morton model and its application, Vladimir I Pozdynyakov, University of Pennsylvania; An Empirical Study of the Convergence Properties of the Non-recombining HJM Forward Rate Tree in Pricing Interest Rate Derivatives, A.R. Radhakrishnan New York University; Modeling Interest Rates with Heath, Jarrow and Morton.