Abstract: Focusing on the dynamic pricing problem of substitutes which have different qualities under social influence, the paper figures out two pricing decisions of the monopolist retailer facing myopic or strategic consumers by using the dynamic game model, and builds the maximum profit model of the retailer to investigate the social influence on optimal pricing and maximum profit of retailers. Study finds that the greater the social influence of high-quality product is, the higher the optimal pricing of high-quality product is and the lower the optimal pricing of low-quality product is, and the maximum profit of the retailer decreases first and then increases when the retailer faces myopic consumers; when consumers are strategic, for different parameter ranges, the social influence on retailer optimal pricing may be positive or negative ; and in the numerical experiments, the results show that the optimal pricing and the maximum profit of the retailer are not only related to the social influence but also related to the quality of products, the discount factor and other variables. The paper provides a theoretical explanation for the behaviors which consumers catch up with popular merchandises and retailers adjust the price of hot commodities, and also provides support for retailers to make pricing decisions facing socially influenced consumers..

Key words: social influence, myopic consumer, strategic consumers, substitutes, dynamic pricing