Dynamic pricing with limited competitor information in a multi-agent economy

Prithviraj Dasgupta, Rajarshi Das

Research output: Chapter in Book/Report/Conference proceedingConference contribution

32 Scopus citations

Abstract

We study the price dynamics in a multi-agent economy consisting of buyers and competing sellers, where each seller has limited information about its competitors’ prices. In this economy, buyers use shopbots while the sellers employ automated pricing agents or pricebots. A pricebot resets its seller’s price at regular intervals with the objective of maximizing revenue in each time period. Derivative following provides a simple, albeit naive, strategy for dynamic pricing in such a scenario. In this paper, we refine the derivative following algorithm and introduce a model-optimizer algorithm that re-estimates the priceprofit relationship for a seller in each period more efficiently. Simulations using the model-optimizer algorithm indicate that it outperforms derivative following even though it does not have any additional information about the market. Our results underscore the role machine learning and optimization can play in fostering competition (or cooperation) in a multi-agent economy where the agents have limited information about their environment.

Original languageEnglish (US)
Title of host publicationLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
EditorsOpher Etzion, Peter Scheuermann
PublisherSpringer Verlag
Pages299-310
Number of pages12
ISBN (Print)354041021X, 9783540410218
DOIs
StatePublished - 2000
Event7th International Conference on Cooperative Information Systems, CoopIS 2000 - Eilat, Israel
Duration: Sep 6 2000Sep 8 2000

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume1901
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Other

Other7th International Conference on Cooperative Information Systems, CoopIS 2000
CountryIsrael
CityEilat
Period9/6/009/8/00

Keywords

  • Dynamic pricing
  • Electronic commerce
  • Multi-agent systems
  • Shopbots and pricebots

ASJC Scopus subject areas

  • Theoretical Computer Science
  • Computer Science(all)

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