Dynamic pricing using Thompson Sampling with fuzzy events

Jason Rhuggenaath; Paulo R. de O. da Costa; Yingqian Zhang; Alp Akcay; Uzay Kaymak

doi:10.1007/978-3-030-50146-4_48

Dynamic pricing using Thompson Sampling with fuzzy events

Jason Rhuggenaath, Paulo R. de O. da Costa, Yingqian Zhang, Alp Akcay, Uzay Kaymak

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Academic › peer-review

1 Citation (Scopus)

150 Downloads (Pure)

Abstract

In this paper we study a repeated posted-price auction between a single seller and a single buyer that interact for a finite number of periods or rounds. In each round, the seller offers the same item for sale to the buyer. The seller announces a price and the buyer can decide to buy the item at the announced price or the buyer can decide not to buy the item. In this paper we study the problem from the perspective of the buyer who only gets to observe a stochastic measurement of the valuation of the item after he buys the item. Furthermore, in our model the buyer uses fuzzy sets to describe his satisfaction with the observed valuations and he uses fuzzy sets to describe his dissatisfaction with the observed price. In our problem, the buyer makes decisions based on the probability of a fuzzy event. His decision to buy or not depends on whether the satisfaction from having a high enough valuation for the item out weights the dissatisfaction of the quoted price. We propose an algorithm based on Thompson Sampling and demonstrate that it performs well using numerical experiments.

Original language	English
Title of host publication	Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings
Editors	Marie-Jeanne Lesot, Susana Vieira, Marek Z. Reformat, João Paulo Carvalho, Anna Wilbik, Bernadette Bouchon-Meunier, Ronald R. Yager
Pages	653-666
Number of pages	14
ISBN (Electronic)	978-3-030-50146-4
DOIs	https://doi.org/10.1007/978-3-030-50146-4_48
Publication status	Published - 15 Jun 2020
Event	18th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems (IPMU 2020) - Lisboa, Portugal Duration: 15 Jun 2020 → 19 Jun 2020 https://ipmu2020.inesc-id.pt/

Publication series

Name	Communications in Computer and Information Science
Volume	1237 CCIS
ISSN (Print)	1865-0929
ISSN (Electronic)	1865-0937

Conference

Conference	18th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems (IPMU 2020)
Country/Territory	Portugal
City	Lisboa
Period	15/06/20 → 19/06/20
Internet address	https://ipmu2020.inesc-id.pt/

Keywords

Bayesian modeling
Dynamic pricing
Exploration-exploitation trade-off
Probability of fuzzy events

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10.1007/978-3-030-50146-4_48

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Rhuggenaath, J., de O. da Costa, P. R., Zhang, Y., Akcay, A., & Kaymak, U. (2020). Dynamic pricing using Thompson Sampling with fuzzy events. In M.-J. Lesot, S. Vieira, M. Z. Reformat, J. P. Carvalho, A. Wilbik, B. Bouchon-Meunier, & R. R. Yager (Eds.), Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings (pp. 653-666). (Communications in Computer and Information Science; Vol. 1237 CCIS). https://doi.org/10.1007/978-3-030-50146-4_48

Rhuggenaath, Jason ; de O. da Costa, Paulo R. ; Zhang, Yingqian et al. / Dynamic pricing using Thompson Sampling with fuzzy events. Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings. editor / Marie-Jeanne Lesot ; Susana Vieira ; Marek Z. Reformat ; João Paulo Carvalho ; Anna Wilbik ; Bernadette Bouchon-Meunier ; Ronald R. Yager. 2020. pp. 653-666 (Communications in Computer and Information Science).

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keywords = "Bayesian modeling, Dynamic pricing, Exploration-exploitation trade-off, Probability of fuzzy events",

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booktitle = "Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings",

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Rhuggenaath, J, de O. da Costa, PR, Zhang, Y , Akcay, A & Kaymak, U 2020, Dynamic pricing using Thompson Sampling with fuzzy events. in M-J Lesot, S Vieira, MZ Reformat, JP Carvalho, A Wilbik, B Bouchon-Meunier & RR Yager (eds), Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings. Communications in Computer and Information Science, vol. 1237 CCIS, pp. 653-666, 18th International Conference on Information Processing and Management of Uncertainty in Knowledge-Based Systems (IPMU 2020), Lisboa, Portugal, 15/06/20. https://doi.org/10.1007/978-3-030-50146-4_48

Dynamic pricing using Thompson Sampling with fuzzy events. / Rhuggenaath, Jason; de O. da Costa, Paulo R.; Zhang, Yingqian et al.
Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings. ed. / Marie-Jeanne Lesot; Susana Vieira; Marek Z. Reformat; João Paulo Carvalho; Anna Wilbik; Bernadette Bouchon-Meunier; Ronald R. Yager. 2020. p. 653-666 (Communications in Computer and Information Science; Vol. 1237 CCIS).

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution › Academic › peer-review

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T1 - Dynamic pricing using Thompson Sampling with fuzzy events

AU - Rhuggenaath, Jason

AU - de O. da Costa, Paulo R.

AU - Zhang, Yingqian

AU - Akcay, Alp

AU - Kaymak, Uzay

PY - 2020/6/15

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N2 - In this paper we study a repeated posted-price auction between a single seller and a single buyer that interact for a finite number of periods or rounds. In each round, the seller offers the same item for sale to the buyer. The seller announces a price and the buyer can decide to buy the item at the announced price or the buyer can decide not to buy the item. In this paper we study the problem from the perspective of the buyer who only gets to observe a stochastic measurement of the valuation of the item after he buys the item. Furthermore, in our model the buyer uses fuzzy sets to describe his satisfaction with the observed valuations and he uses fuzzy sets to describe his dissatisfaction with the observed price. In our problem, the buyer makes decisions based on the probability of a fuzzy event. His decision to buy or not depends on whether the satisfaction from having a high enough valuation for the item out weights the dissatisfaction of the quoted price. We propose an algorithm based on Thompson Sampling and demonstrate that it performs well using numerical experiments.

AB - In this paper we study a repeated posted-price auction between a single seller and a single buyer that interact for a finite number of periods or rounds. In each round, the seller offers the same item for sale to the buyer. The seller announces a price and the buyer can decide to buy the item at the announced price or the buyer can decide not to buy the item. In this paper we study the problem from the perspective of the buyer who only gets to observe a stochastic measurement of the valuation of the item after he buys the item. Furthermore, in our model the buyer uses fuzzy sets to describe his satisfaction with the observed valuations and he uses fuzzy sets to describe his dissatisfaction with the observed price. In our problem, the buyer makes decisions based on the probability of a fuzzy event. His decision to buy or not depends on whether the satisfaction from having a high enough valuation for the item out weights the dissatisfaction of the quoted price. We propose an algorithm based on Thompson Sampling and demonstrate that it performs well using numerical experiments.

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Rhuggenaath J, de O. da Costa PR, Zhang Y , Akcay A , Kaymak U. Dynamic pricing using Thompson Sampling with fuzzy events. In Lesot MJ, Vieira S, Reformat MZ, Carvalho JP, Wilbik A, Bouchon-Meunier B, Yager RR, editors, Information Processing and Management of Uncertainty in Knowledge-Based Systems - 18th International Conference, IPMU 2020, Proceedings. 2020. p. 653-666. (Communications in Computer and Information Science). doi: 10.1007/978-3-030-50146-4_48

Dynamic pricing using Thompson Sampling with fuzzy events

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