Priserpriser

Priserpriser is a theoretical concept in economics and computational pricing that refers to a dynamic, iterative process in which market prices are continually updated in response to observed demand, competitor pricing, and previous price movements. The term emphasizes the recursive nature of price formation, where each adjustment becomes new information that influences subsequent decisions by buyers and sellers.

Origin and usage: The term prisserpriser is a neologism coined in educational materials and agent-based simulations to illustrate how price signals can reinforce themselves through feedback loops. It is not a standard designation in mainstream economics, but it is used to discuss dynamic pricing mechanisms in digital markets and automated pricing systems.

Mechanism: A simple prisserprisers model begins with an initial price p0. Demand is a function D(p). After observing sales, sellers adjust price by Δp = f(D(p), P*, margins, and competitor prices). If demand exceeds targets, Δp is positive; if demand is weak or margins shrink, Δp may be negative. This update repeats at regular intervals, generating sequences of price levels that can converge, oscillate, or diverge depending on parameters such as price sensitivity, update frequency, and competitive response. In multi-vendor settings, cross-comparisons and coordination attempts can create more complex feedbacks.

Applications and limitations: In teaching, prisserpriser helps illustrate how feedback loops affect price stability and market efficiency. In algorithmic pricing, similar rules are used by online retailers to optimize revenue, yet real systems incorporate limits, randomization, and regulations to prevent instability. Critics warn that exaggerated recursive updates can produce price bubbles or price wars, hurting consumers and long-run welfare.

See also: dynamic pricing, price elasticity of demand, feedback loop, algorithmic pricing, agent-based modeling.