News

Seminar

Dynamic and Non-Uniform Pricing Strategies for Revenue Maximization

Tanmoy Chakraborty

Date: February 10, 2010
Lally 02 - 11:00 a.m. to 12:00 p.m.

Abstract:

We study the Item Pricing problem for revenue maximization in the limited supply setting, where a single seller with n distinct items caters to m buyers with unknown subadditive valuation functions who arrive in a sequence. The seller sets the prices on individual items. Each buyer buys a subset of yet unsold items that maximizes her utility. Our goal is to design pricing strategies that guarantee an expected revenue that is within a small factor of the optimal social welfare -- an upper bound on the maximum revenue possible. Most earlier work has focused on the unlimited supply setting, where selling an item to a buyer does not affect the availability of the item to the future buyers. Recently, Balcan et. al. studied the limited supply setting, giving a randomized pricing strategy that achieves a super-poly-logarithmic approximation; their strategy assigns a single price to all items (uniform pricing), and never changes it (static pricing). They also showed that no pricing strategy that is both static and uniform can give a poly-logarithmic approximation. We design dynamic uniform pricing strategies (all items are identically priced but item prices can change over time), as well as static non-uniform pricing strategies (different items can have different prices but prices do not change over time), that give poly-logarithmic approximation for revenue maximization. Thus in the limited supply setting, our results highlight a strong separation between the power of dynamic and non-uniform pricing strategies versus static uniform pricing strategy. This is a joint work with Zhiyi Huang and Sanjeev Khanna.

Last updated: February 10, 2010