TAKING THE PERSPECTIVE OF A SELLER AND A BUYER: IMPLICATIONS FOR PRICE ELICITATION AND PRICE FRAMING

This dissertation consists of two essays which investigate how assuming the role of a seller or a buyer affects valuations in a price elicitation task (essay I) and how different presentations of an equivalent price affect evaluations when a consumer plays the dual roles of a buyer and a seller in transactions involving trade-ins (essay II). Sellers’ willingness to accept (WTA) to give up a good is typically higher than buyers' willingness to pay (WTP) to obtain the good. Essay I proposes that valuation processes of sellers and buyers are guided by a motivational orientation of “getting the best.” For a seller (buyer) indicating WTA (WTP), getting the best implies receiving as much as possible to give up a specific good (giving up as little as possible to get the specific good). Results of six studies suggest that the WTA-WTP elicitation task activates different directional goals, leading to the WTA-WTP disparity. The different directional goals lead sellers and buyers to focus on different aspects and bias their cognitive reasoning and interpretation of information. By connecting the valuation process to the general motivation of getting the best, this research provides a unifying framework to explain the disparate interpretations of the WTA-WTP disparity. Many new purchases and replacement decisions involve consumers’ trading in their old products. In such transactions, the overall exchange may be priced either as separate transactions (partitioned) with price tags for the payment and the receipt or as a single net price (consolidated) which takes into account the value of the trade-in. Essay II examines whether consumers prefer a partitioned price versus a consolidated price presentation. The findings suggest that when consumers are trading in a product which has a low value relative to the price of a new product, they prefer a consolidated price. In contrast, when trading in a product which has high value, they prefer a partitioned price. The results suggest that consumers use the price of the new product as an anchor to evaluate the trade-in value, and the perception of the trade-in value influences the overall evaluation especially when the transaction is partitioned.

Vehicle Routing Problems that Minimize the Completion Time: Heuristics, Worst-Case Analyses, and Computational Results

In the standard Vehicle Routing Problem (VRP), we route a fleet of vehicles to deliver the demands of all customers such that the total distance traveled by the fleet is minimized. In this dissertation, we study variants of the VRP that minimize the completion time, i.e., we minimize the distance of the longest route. We call it the min-max objective function. In applications such as disaster relief efforts and military operations, the objective is often to finish the delivery or the task as soon as possible, not to plan routes with the minimum total distance. Even in commercial package delivery nowadays, companies are investing in new technologies to speed up delivery instead of focusing merely on the min-sum objective. In this dissertation, we compare the min-max and the standard (min-sum) objective functions in a worst-case analysis to show that the optimal solution with respect to one objective function can be very poor with respect to the other. The results motivate the design of algorithms specifically for the min-max objective. We study variants of min-max VRPs including one problem from the literature (the min-max Multi-Depot VRP) and two new problems (the min-max Split Delivery Multi-Depot VRP with Minimum Service Requirement and the min-max Close-Enough VRP). We develop heuristics to solve these three problems. We compare the results produced by our heuristics to the best-known solutions in the literature and find that our algorithms are effective. In the case where benchmark instances are not available, we generate instances whose near-optimal solutions can be estimated based on geometry. We formulate the Vehicle Routing Problem with Drones and carry out a theoretical analysis to show the maximum benefit from using drones in addition to trucks to reduce delivery time. The speed-up ratio depends on the number of drones loaded onto one truck and the speed of the drone relative to the speed of the truck.