Transcript Methods to solve incentive design problems

Optimization and Game Theory
Models of E-Markets - A Survey
Harri Ehtamo
Systems Analysis Laboratory
Helsinki University of Technology
www.sal.tkk.fi
S ystems
Analysis Laboratory
Helsinki University of Technology
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What is E-commerce?
New commercial affairs arising:
in the Internet
through the use of various
Electronic Shelf Labeling Systems
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Analysis Laboratory
Helsinki University of Technology
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New technology allows
the retailers
to collect, process and
deliver sales / customer data
to plan intelligent pricing strategies
to change prices frequently at low cost
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Analysis Laboratory
Helsinki University of Technology
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Data mining
 personalization
 customization
Amazon.com: online price tests with customers
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Analysis Laboratory
Helsinki University of Technology
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Pricing strategies
Posted price mechanisms:
“take-it-or-leave-it” prices
Price-discovery mechanisms:
prices determined by bidding processes,
e.g., auctions
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Analysis Laboratory
Helsinki University of Technology
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Mechanism design: Optimization and
game theory tools for pricing goods
Price discrimination; e.g., nonlinear pricing
Combinatorial auctions
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Analysis Laboratory
Helsinki University of Technology
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NP complete CAP:
N bidders, M objects
max
 b( S ) x
SM
s.t.
x
S :iS
S
S
1
i  M
x S  0 , 1 S  M
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Analysis Laboratory
Helsinki University of Technology
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Applications
Nonlinear pricing in the design of electricity
tariffs (Wilson, Räsänen et. al, in the 1990’s)
Dynamic pricing policies in brick-and-mortar
stores (in the 2000’s)
Combinatorial Auctions (FCC’s Narrow Band
Auction 1994, CAs in procurement of
logistic services 1993)
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Analysis Laboratory
Helsinki University of Technology
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Research questions
How to exploit the vast resources of online
data to improve the shopping process
Theoretical work to model descriptively,
predictively and normatively some aspects of
the process to enable competitional advances
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Analysis Laboratory
Helsinki University of Technology
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Literature
A.M. Geoffrion, R. Krihnan: “Special issue on E-Business and
Management Science”, Management Science, Vol. 49, No. 10/11,
November 2003
R.B. Wilson: “Nonlinear Pricing”, Oxford University Press, 1993
M. Räsänen, J. Ruusunen, R.P. Hämäläinen: “Optimal tariff design
under consumer self-selection”, Energy Economics 19, pp. 151167, 1997
S. de Vries, R.V. Vohra: “Combinatorial Auctions: A Survey”,
INFORMS J. on Computing, Vol. 15, No. 3, pp. 284-309, 2003
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Analysis Laboratory
Helsinki University of Technology
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