Which mathematical concept forms the core foundation of most dynamic pricing algorithms used by major online retailers?

Dynamic pricing has transformed modern retail, with mathematical algorithms determining what you pay for products in real-time. These sophisticated models analyze market conditions, competitor pricing, inventory levels, demand patterns, and even individual customer behavior to optimize prices. Behind these systems are complex mathematical concepts like game theory, statistical modeling, and machine learning. How well do you understand the mathematical foundations that power today's retail pricing strategies?

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Bayesian probability networks that model uncertainty in customer purchasing behavior
Multi-armed bandit algorithms that balance exploration vs. exploitation in price testing
Fibonacci sequences that create naturally appealing price points for consumers
Euclidean distance calculations that cluster customers into precise demographic segments