Static pricing for multi-unit prophet inequalities [article]

Shuchi Chawla, Nikhil Devanur, Thodoris Lykouris
2021 arXiv   pre-print
We study a pricing problem where a seller has k identical copies of a product, buyers arrive sequentially, and the seller prices the items aiming to maximize social welfare. When k=1, this is the so called "prophet inequality" problem for which there is a simple pricing scheme achieving a competitive ratio of 1/2. On the other end of the spectrum, as k goes to infinity, the asymptotic performance of both static and adaptive pricing is well understood. We provide a static pricing scheme for the
more » ... mall-supply regime: where k is small but larger than 1. Prior to our work, the best competitive ratio known for this setting was the 1/2 that follows from the single-unit prophet inequality. Our pricing scheme is easy to describe as well as practical – it is anonymous, non-adaptive, and order-oblivious. We pick a single price that equalizes the expected fraction of items sold and the probability that the supply does not sell out before all customers are served; this price is then offered to each customer while supply lasts. This extends an approach introduced by Samuel-Cahn for the case of k=1. This pricing scheme achieves a competitive ratio that increases gradually with the supply and approaches to 1 at the optimal rate. Astonishingly, for k<20, it even outperforms the state-of-the-art adaptive pricing for the small-k regime.
arXiv:2007.07990v2 fatcat:ka37h7wrjjhktjshkfdse5regy