To Interfere or Not To Interfere: Information Revelation and Price-Setting Incentives in a Multiagent Learning Environment
Operations Research, forthcoming
101 Pages Posted: 11 Jun 2021 Last revised: 7 Sep 2023
Date Written: September 1, 2023
We consider a platform in which multiple sellers offer their products for sale over a time horizon of T periods. Each seller sets its own price. The platform collects a fraction of the sales revenue and provides price-setting incentives to the sellers to maximize its own revenue. The demand for each seller’s product is a function of all sellers’ prices and some customer features. Initially, neither the platform nor the sellers know the demand function, but they can learn about it through sales observations: each seller observes its own sales, whereas the platform observes all sellers’ sales as well as the customer feature information. We measure the platform’s performance by comparing its expected revenue with the full-information optimal revenue, and design policies that enable the platform to manage information revelation and price-setting incentives. Perhaps surprisingly, a simple “do-nothing” policy does not always exhibit poor revenue performance and can perform exceptionally well under certain conditions. With a more conservative policy that reveals information to make price-setting incentives more effective, the platform can always protect itself from large revenue losses caused by demand model uncertainty. We develop a strategic-reveal-and-incentivize policy that combines the benefits of the aforementioned policies and thereby achieves asymptotically optimal revenue performance as T grows large.
Keywords: sharing economy, two-sided platforms, revenue management, pricing, demand learning, sequential estimation, exploration-exploitation, regret.
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