Firefly-inspired synchronization for improved dynamic pricing in online markets

Janyl Jumadinova, Prithviraj Dasgupta

Research output: Chapter in Book/Report/Conference proceedingConference contribution

17 Citations (Scopus)

Abstract

We consider the problem of dynamic pricing by sellers in an online market economy using software agents called pricebots. In previous research on dynamic pricing algorithms, each seller's pricebot employs either heuristics-based or learning-based techniques to determine and update the profit maximizing price for itself at certain intervals in response to changes in market dynamics. In these dynamic pricing techniques, each seller's pricebot uses only its private information such as past prices and profits to update its price in successive intervals. In this paper, we posit that the profits obtained by a pricebot can be improved if each pricebot incorporates its competitors' pricing information along with its private price and profit information in its price-update calculations. However, incorporating competitors' pricing information accurately into a pricebot's dynamic pricing algorithm is a challenging problem because competing sellers (pricebots) update their prices asynchronously and by an amount determined by each seller's private pricing strategy. Our contribution in this paper is a novel dynamic pricing algorithm that uses a distributed synchronization model observed in nature to align each seller's price with its competitors' prices. Our analytical and simulation results show that the combination of a heuristics-based pricing mechanism that uses only a seller's private information and the synchronization-based mechanism that aligns its prices with its competitors, enables a seller's pricebot improve its profits by as much as 78% as compared to previous dynamic pricing algorithms.

Original languageEnglish (US)
Title of host publicationProceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008
Pages403-412
Number of pages10
DOIs
StatePublished - Dec 30 2008
Event2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008 - Venice, Italy
Duration: Oct 20 2008Oct 24 2008

Publication series

NameProceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008

Conference

Conference2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008
CountryItaly
CityVenice
Period10/20/0810/24/08

Fingerprint

Synchronization
Costs
Profitability
Software agents

ASJC Scopus subject areas

  • Computer Networks and Communications
  • Hardware and Architecture
  • Control and Systems Engineering

Cite this

Jumadinova, J., & Dasgupta, P. (2008). Firefly-inspired synchronization for improved dynamic pricing in online markets. In Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008 (pp. 403-412). [4663443] (Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008). https://doi.org/10.1109/SASO.2008.26

Firefly-inspired synchronization for improved dynamic pricing in online markets. / Jumadinova, Janyl; Dasgupta, Prithviraj.

Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008. 2008. p. 403-412 4663443 (Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008).

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Jumadinova, J & Dasgupta, P 2008, Firefly-inspired synchronization for improved dynamic pricing in online markets. in Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008., 4663443, Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008, pp. 403-412, 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008, Venice, Italy, 10/20/08. https://doi.org/10.1109/SASO.2008.26
Jumadinova J, Dasgupta P. Firefly-inspired synchronization for improved dynamic pricing in online markets. In Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008. 2008. p. 403-412. 4663443. (Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008). https://doi.org/10.1109/SASO.2008.26
Jumadinova, Janyl ; Dasgupta, Prithviraj. / Firefly-inspired synchronization for improved dynamic pricing in online markets. Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008. 2008. pp. 403-412 (Proceedings - 2nd IEEE International Conference on Self-Adaptive and Self-Organizing Systems, SASO 2008).
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