Citation:
Pashkovich, K. , & Xie, X. . (10040). A Two-Step Approach to Optimal Dynamic Pricing in Multi-Demand Combinatorial Markets. Retrieved from https://arxiv.org/abs/2201.12869
Abstract:
Online markets are a part of everyday life, and their rules are governed by algorithms. Assuming participants are inherently self-interested, well designed rules can help to increase social welfare. Many algorithms for online markets are based on prices: the seller is responsible for posting prices while buyers make purchases which are most profitable given the posted prices. To make adjustments to the market the seller is allowed to update prices at certain timepoints.
Posted prices are an intuitive way to design a market. Despite the fact that each buyer acts selfishly, the seller's goal is often assumed to be that of social welfare maximization. Berger, Eden and Feldman recently considered the case of a market with only three buyers where each buyer has a fixed number of goods to buy and the profit of a bought bundle of items is the sum of profits of the items in the bundle. For such markets, Berger et. al. showed that the seller can maximize social welfare by dynamically updating posted prices before arrival of each buyer. Bérczi, Bérczi-Kovács and Szögi showed that the social welfare can be maximized also when each buyer is ready to buy at most two items.
We study the power of posted prices with dynamical updates in more general cases. First, we show that the result of Berger et. al. can be generalized from three to four buyers. Then we show that the result of Bérczi, Bérczi-Kovács and Szögi can be generalized to the case when each buyer is ready to buy up to three items. We also show that a dynamic pricing is possible whenever there are at most two allocations maximizing social welfare.
Posted prices are an intuitive way to design a market. Despite the fact that each buyer acts selfishly, the seller's goal is often assumed to be that of social welfare maximization. Berger, Eden and Feldman recently considered the case of a market with only three buyers where each buyer has a fixed number of goods to buy and the profit of a bought bundle of items is the sum of profits of the items in the bundle. For such markets, Berger et. al. showed that the seller can maximize social welfare by dynamically updating posted prices before arrival of each buyer. Bérczi, Bérczi-Kovács and Szögi showed that the social welfare can be maximized also when each buyer is ready to buy at most two items.
We study the power of posted prices with dynamical updates in more general cases. First, we show that the result of Berger et. al. can be generalized from three to four buyers. Then we show that the result of Bérczi, Bérczi-Kovács and Szögi can be generalized to the case when each buyer is ready to buy up to three items. We also show that a dynamic pricing is possible whenever there are at most two allocations maximizing social welfare.
