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Home / Proceedings / Proceedings of the AAAI Conference on Artificial Intelligence

Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions

February 1, 2023

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Authors

Weiran Shen

Tsinghua University


Binghui Peng

Tsinghua University


Hanpeng Liu

Tsinghua University


Michael Zhang

Chinese University of Hong Kong


Ruohan Qian

Baidu Inc.


Yan Hong

Baidu Inc.


Zhi Guo

Baidu Inc.


Zongyao Ding

Baidu Inc.


Pengjun Lu

Baidu Inc.


Pingzhong Tang

Tsinghua University


DOI:

10.1609/aaai.v34i02.5600


Abstract:

In many social systems in which individuals and organizations interact with each other, there can be no easy laws to govern the rules of the environment, and agents' payoffs are often influenced by other agents' actions. We examine such a social system in the setting of sponsored search auctions and tackle the search engine's dynamic pricing problem by combining the tools from both mechanism design and the AI domain. In this setting, the environment not only changes over time, but also behaves strategically. Over repeated interactions with bidders, the search engine can dynamically change the reserve prices and determine the optimal strategy that maximizes the profit. We first train a buyer behavior model, with a real bidding data set from a major search engine, that predicts bids given information disclosed by the search engine and the bidders' performance data from previous rounds. We then formulate the dynamic pricing problem as an MDP and apply a reinforcement-based algorithm that optimizes reserve prices over time. Experiments demonstrate that our model outperforms static optimization strategies including the ones that are currently in use as well as several other dynamic ones.

Topics: AAAI

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Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions Proceedings of the AAAI Conference on Artificial Intelligence (2020) 2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions AAAI 2020, 2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang (2020). Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions. Proceedings of the AAAI Conference on Artificial Intelligence, 2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions. Proceedings of the AAAI Conference on Artificial Intelligence 2020 p.2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. 2020. Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions. "Proceedings of the AAAI Conference on Artificial Intelligence". 2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. (2020) "Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions", Proceedings of the AAAI Conference on Artificial Intelligence, p.2236-2243

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang, "Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions", AAAI, p.2236-2243, 2020.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. "Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions". Proceedings of the AAAI Conference on Artificial Intelligence, 2020, p.2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. "Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions". Proceedings of the AAAI Conference on Artificial Intelligence, (2020): 2236-2243.

Weiran Shen||Binghui Peng||Hanpeng Liu||Michael Zhang||Ruohan Qian||Yan Hong||Zhi Guo||Zongyao Ding||Pengjun Lu||Pingzhong Tang. Reinforcement Mechanism Design: With Applications to Dynamic Pricing in Sponsored Search Auctions. AAAI[Internet]. 2020[cited 2023]; 2236-2243.


ISSN: 2374-3468


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