ABSTRACT
We consider the problem faced by a firm that receives highly differentiated products in an online fashion and needs to price them in order to sell them to its customer base. Products are described by vectors of features and the market value of each product is linear in the values of the features. The firm does not initially know the values of the different features, but it can learn the values of the features based on whether products were sold at the posted prices in the past. This model is motivated by a question in online advertising, where impressions arrive over time and can be described by vectors of features. We first consider a multi-dimensional version of binary search over polyhedral sets, and show that it has exponential worst-case regret. We then propose a modification of the prior algorithm where uncertainty sets are replaced by their Lowner-John ellipsoids. We show that this algorithm has a worst-case regret that is quadratic in the dimensionality of the feature space and logarithmic in the time horizon.
Index Terms
- Feature-based Dynamic Pricing
Recommendations
Feature-Based Dynamic Pricing
We consider the problem faced by a firm that receives highly differentiated products in an online fashion. The firm needs to price these products to sell them to its customer base. Products are described by vectors of features and the market value of each ...
Best of Both Worlds Ad Contracts: Guaranteed Allocation and Price with Programmatic Efficiency
Buying display ad impressions via real-time auctions comes with significant allocation and price uncertainties. We design and analyze a contract that mitigates this uncertainty risk by providing guaranteed allocation and prices while maintaining the ...
Optimal Pricing of Seasonal Products in the Presence of Forward-Looking Consumers
We study the optimal pricing of a finite quantity of a fashion-like seasonal good in the presence of forward-looking (strategic) customers. We distinguish between two classes of pricing strategies: contingent and announced fixed-discount. In both cases, ...
Comments