Loading…
Attending this event?
Monday, October 14 • 4:15pm - 4:30pm
Dynamic Pricing with Hybrid Linear Contextual Bandit

Sign up or log in to save this to your schedule and see who's attending!

In recent times, many industries have become interested in developing algorithms for dynamically varying prices based on product, customer and other market related features, to drive profitability and revenue growth. However, in many real-world use cases, where historical prices show very little or no variation, typical methods for dynamic pricing by estimating purchase probabilities are not applicable. In this study, we develop practical approaches for dynamic pricing based on reinforcement learning. We propose a hybrid contextual bandit model considering the customer or product features. The pricing setting presents significant challenges to the application of the multi-armed bandit framework since the arms are highly correlated. To capture correlation across arms, we consider a hybrid model with both arm independent and dependent features. We demonstrate using simulations that these methods can efficiently discover the optimal prices and provide a revenue lift of up to 7.6% as compared to the current practices.

Speakers
avatar for Yan Xu

Yan Xu

Presenter, PROS Inc
RK

Ravi Kumar

PROS Inc
avatar for Justin Silver

Justin Silver

Senior Scientist, PROS Inc



Monday October 14, 2019 4:15pm - 4:30pm
BRC 280

Attendees (2)