Dynamic pricing in mobile gaming apps

Abstract

In this thesis, I study dynamic pricing models for experience goods and their contribution to pricing in the mobile gaming app industry. Firstly, I will describe mobile gaming apps as information experience goods. I will also discuss the role of uncertainty and imperfect information in generating dynamics in experience goods markets. Secondly, I will present and assess the contribution of several pricing models for experience goods. Finally, I evaluate their contribution to pricing of mobile games. The theoretical framework of pricing experience goods suggests that optimal pricing paths for experience goods are a dynamic price reduction strategy or introductory offers depending on consumers' initial valuations in relation to their valuations after experiencing a product. However, in the mobile gaming market, the latter strategy dominates as so-called freemium or free-to-play games are the most common in the major mobile game platforms.