Posted Pricing sans Discrimination

Posted Pricing sans Discrimination

Shreyas Sekar

Proceedings of the Twenty-Sixth International Joint Conference on Artificial Intelligence
Main track. Pages 388-394. https://doi.org/10.24963/ijcai.2017/55

In the quest for market mechanisms that are easy to implement, yet close to optimal, few seem as viable as posted pricing. Despite the growing body of impressive results, the performance of most posted price mechanisms however, rely crucially on "price discrimination" when multiple copies of a good are available. For the more general case with non-linear production costs on each good, hardly anything is known for general multi-good markets. With this in mind, we study the problem of social welfare maximization in a Bayesian setting where the seller can produce any number of copies of a good but faces convex production costs for the same. Our central contribution is a structured framework for decision making and static item pricing in the face of uncertainty and production costs, i.e., the seller decides how much to produce and posts a single price per good that is common to all buyers, the buyers arrive sequentially and purchase utility maximizing bundles of goods. The framework yields constant factor approximations to the optimum welfare when buyer valuations are fractionally subadditive, extends to more general valuations and also settings where the seller is completely oblivious to buyer valuations. Our work presents the first known results for non-discriminatory pricing in environments with non-linear costs where we only have access to stochastic information regarding buyer preferences. At a high level, our results imply that it is often possible to obtain good guarantees without discriminating against buyers, i.e., charging them differently for the same good.
Keywords:
Agent-based and Multi-agent Systems: Economic paradigms, auctions and market-based systems
Agent-based and Multi-agent Systems: Noncooperative Games