{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2025,8,24]],"date-time":"2025-08-24T01:50:45Z","timestamp":1756000245337},"publisher-location":"California","reference-count":0,"publisher":"International Joint Conferences on Artificial Intelligence Organization","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"published-print":{"date-parts":[[2020,7]]},"abstract":"<jats:p>In many markets, like electricity or cloud computing markets, providers incur large costs for keeping sufficient capacity in reserve to accommodate demand fluctuations of a mostly fixed user base. These costs are significantly affected by the unpredictability of the users' demand. Nevertheless, standard mechanisms charge fixed per-unit prices that do not depend on the variability of the users' demand. In this paper, we study a variance-based pricing rule in a two-provider market setting and perform a game-theoretic analysis of the resulting competitive effects. We show that an innovative provider who employs variance-based pricing can choose a pricing strategy that guarantees himself a higher profit than using fixed per-unit prices for any individually rational response of a provider playing a fixed pricing strategy. We then characterize all equilibria for the setting where both providers use variance-based pricing strategies. We show that, in equilibrium, the providers' profits may increase or decrease, depending on their cost functions. However, social welfare always weakly increases.<\/jats:p>","DOI":"10.24963\/ijcai.2020\/51","type":"proceedings-article","created":{"date-parts":[[2020,7,8]],"date-time":"2020-07-08T08:12:10Z","timestamp":1594195930000},"page":"362-370","source":"Crossref","is-referenced-by-count":7,"title":["The Competitive Effects of Variance-based Pricing"],"prefix":"10.24963","author":[{"given":"Ludwig","family":"Dierks","sequence":"first","affiliation":[{"name":"University of Zurich"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Sven","family":"Seuken","sequence":"additional","affiliation":[{"name":"University of Zurich"}],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"10584","event":{"number":"28","sponsor":["International Joint Conferences on Artificial Intelligence Organization (IJCAI)"],"acronym":"IJCAI-PRICAI-2020","name":"Twenty-Ninth International Joint Conference on Artificial Intelligence and Seventeenth Pacific Rim International Conference on Artificial Intelligence {IJCAI-PRICAI-20}","start":{"date-parts":[[2020,7,11]]},"theme":"Artificial Intelligence","location":"Yokohama, Japan","end":{"date-parts":[[2020,7,17]]}},"container-title":["Proceedings of the Twenty-Ninth International Joint Conference on Artificial Intelligence"],"original-title":[],"deposited":{"date-parts":[[2020,7,8]],"date-time":"2020-07-08T22:13:03Z","timestamp":1594246383000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ijcai.org\/proceedings\/2020\/51"}},"subtitle":[],"proceedings-subject":"Artificial Intelligence Research Articles","short-title":[],"issued":{"date-parts":[[2020,7]]},"references-count":0,"URL":"https:\/\/doi.org\/10.24963\/ijcai.2020\/51","relation":{},"subject":[],"published":{"date-parts":[[2020,7]]}}}