Modern economics seeks market equilibrium price based on the cross of supply and demand curves, and which depends on such presuppositions that consumer preference, producer costs as well as the signals of product quality are clear. However, the realistic market is full of serious uncertainty, and production cost, consumption utility and quality signal are all the functions of the price, so that it is impossible to obtain equilibrium price based on the cross of supply and demand curves. In fact, in uncertain market, people usually predict the prices of goods and services with the help of some anchoring values, which contribute to contracts and trading. And then, the price anchoring values of different products depend on a hierarchical sequence based on a certain rule, then bringing about the tournament-based market pricing system: the price levels of different commodities and the wage levels of different labors are often related with their levels. Furthermore, what the tournament-based pricing system abides to is not the principle of production cost or the principle of labor input, also not the principle of objective function or the principle of output contribution. As a result, tournament-based pricing system is neither fair nor efficient. The basic reason for why the tournament-based pricing system is so popular lies in that the power structure in the market economy is asymmetric; especially, the fragmented power makes few uppers people have the strong power to make market pricing rule, and the pricing principle is only in favor of few sovereigns to achieve their interest maximization and few riches to achieve their utility maximization. Therefore, based on the combination of anchoring effect and power analysis framework, we can reveal the unified tournament-based pricing system as well as its interest orientation in uncertain market. Based on the above analysis, this paper brings about some profound theoretical and practical significance.(1)By introducing the market uncertainty, we can deeply make out the limitations of neoclassical price theory, and a better explanation of the specific location of the demand(and supply)curve and it moving.(2)By considering the fuzziness of goods value and the variability of utility, we can obtain more real intermittent supply and demand curves, and then identify the different forms of long-term and short-term supply and demand curves.(3)By investigating the secondary properties, we can understand the production of all kinds of different products, and provide a better explanation of the prices of sharing cost products.(4)By studying the anchoring effect, we can realize that the product price usually has a certain range, confirming the capital-interest theory of new Cambridge school.(5)By analyzing the characteristics of tournament and the social power structure, we can discern the pricing strategy of firms and the input of the non-productive resources, and then have a better understanding of such phenomena as the proliferation of fake and anti progressive technology development.(6)By investigating the interest orientation embedded in the tournament-based pricing system, we can more profoundly discover the internal defects of market mechanism, so as to provide the basis and direction for the market supervision, income distribution and other public policies. Finally, considering that market pricing is the cornerstone of modern economics, this paper will make a fundamental impact on the modern mainstream economic system.
/ Journals / Journal of Finance and Economics
Journal of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YaoLan BaoXiaohua HuangJun, Vice Editor-in-Chief
The Pricing Mechanism in the Market under Uncertainty: A Reflection on Neo-classical Price Theory Based on the Analysis Framework of Psychology and Power
Journal of Finance and Economics Vol. 44, Issue 05, pp. 61 - 82 (2018) DOI:10.16538/j.cnki.jfe.2018.05.005
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Cite this article
Zhu Fuqiang. The Pricing Mechanism in the Market under Uncertainty: A Reflection on Neo-classical Price Theory Based on the Analysis Framework of Psychology and Power[J]. Journal of Finance and Economics, 2018, 44(5): 61-82.
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