Sequential item pricing for unlimited supply

We investigate the extent to which price updates can increase the revenue of a seller with little prior information on demand. We study prior-free revenue maximization for a seller with unlimited supply of n item types facing m myopic buyers present for k < log n days. For the static (k = 1) case, Balcan et al. [2] show that one random item price (the same on each item) yields revenue within a (log m+log n) factor of optimum and this factor is tight. We introduce hereditary maximizers, a novel property regarding buyer valuations that is sufficient for a significant improvement of the approximation factor in the dynamic (k > 1) setting. The hereditary maximizers property limits complementarities among items and is satisfied by any multi-unit or gross substitutes valuation. Our main result is a non-increasing, randomized, schedule of k item prices, the same on each item, with expected revenue within a O(log m+log n k ) factor of optimum for private valuations with hereditary maxim...

• Type: Journal
• Year: 2010
• Where: CORR
• Authors: Maria-Florina Balcan, Florin Constantin
• Keywords: Approximation Factor, CORR 2010, Education, Hereditary Maximizers, Revenue Maximization