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Dynamic pricing depends on the understanding of uncertain demand. We ask the question whether a stochastic system is sufficient to model this uncertainty. We propose a novel paradigm based on statistical analysis of recurrence quantification measures. The paradigm fits nonlinear dynamics by simultaneously optimizing both the determinism and the trapping time in recurrence plots and identifies an optimal time delay embedding. We firstly apply the paradigm on well-known deterministic and stochastic systems including Duffing systems and multi-fractional Gaussian noise. We then apply the paradigm to optimize the sampling of empirical point process data from RideAustin, a company providing ride share service in the city of Austin, Texas, the USA, thus reconstructing a period-7 attractor. Results show that in deterministic systems, an optimal embedding exists under which recurrence plots exhibit robust diagonal or vertical lines. However, in stochastic systems, an optimal embedding often does not exist, evidenced by the inability to shrink the standard deviation of either the determinism or the trapping time. By means of surrogate testing, we also show that a Poisson process or a stochastic system with periodic trend is insufficient to model uncertainty contained in empirical data. By contrast, the period-7 attractor dominates and well models nonlinear dynamics of empirical data via irregularly switching of the slow and the fast dynamics. Findings highlight the importance of fitting and recreating nonlinear dynamics of data in modeling practical problems.

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Price information enables consumers to anticipate a price and to make purchasing decisions based on their price expectations, which are critical for agents with pricing decisions or price regulations. A company with pricing decisions can aim to optimise the short-term or the long-term revenue, each of which leads to different pricing strategies thereby different price expectations. The choices between the two optimisation objectives consider the maximal revenue and the robustness of a chosen pricing strategy against market volatility. However the robustness is rarely identified in a volatile market. Here, we investigate the robustness of optimal pricing strategies with the short-term or long-term optimisation objectives through the analysis of nonlinear dynamics of price expectations. Bifurcation diagrams and period diagrams are introduced to compare their change in dynamics. Our results highlight that period adding bifurcations occur during the dynamic pricing processes studied. These bifurcations would challenge the robustness of an optimal pricing strategy. The consideration of the long-term revenue allows a company to charge a higher price, which in turn increases the revenue. However, the consideration of the shortterm revenue can avoid period adding bifurcations, contributing to a robust pricing strategy. This allows a company to harvest a good revenue through a robust pricing strategy in a volatile market and to satisfy regulations of a control in price volatility.