Abstract
We consider the unit-demand min-buying pricing problem, in which we want to compute revenue maximizing prices for a set of products \(\mathcal{P}\) assuming that each consumer from a set of consumer samples \(\mathcal{C}\) will purchase her cheapest affordable product once prices are fixed. We focus on the special uniform-budget case, in which every consumer has only a single non-zero budget for some set of products. This constitutes a special case also of the unit-demand envy-free pricing problem.
We show that, assuming specific hardness of the balanced bipartite independent set problem in constant degree graphs or hardness of refuting random 3CNF formulas, the unit-demand min-buying pricing problem with uniform budgets cannot be approximated in polynomial time within \(\mathcal{O}(\log ^{\varepsilon} |\mathcal{C}|)\) for some ε> 0. This is the first result giving evidence that unit-demand envy-free pricing, as well, might be hard to approximate essentially better than within the known logarithmic ratio.
We then introduce a slightly more general problem definition in which consumers are given as an explicit probability distribution and show that in this case the envy-free pricing problem can be shown to be inapproximable within \(\mathcal{O}(|\mathcal{P}|^{\varepsilon})\) assuming NP \(\nsubseteq \bigcap _{\delta >0}\) BPTIME(\(2^{\mathcal{O}(n^{\delta})}\)). Finally, we briefly argue that all the results apply to the important setting of pricing with single-minded consumers as well.
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Briest, P. (2008). Uniform Budgets and the Envy-Free Pricing Problem. In: Aceto, L., Damgård, I., Goldberg, L.A., Halldórsson, M.M., Ingólfsdóttir, A., Walukiewicz, I. (eds) Automata, Languages and Programming. ICALP 2008. Lecture Notes in Computer Science, vol 5125. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-70575-8_66
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DOI: https://doi.org/10.1007/978-3-540-70575-8_66
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