Data-Driven Dynamic Assortment in Online Platforms: Learning about Two Sides
This paper studies a dynamic assortment problem on a two-sided service platform with incomplete information and heterogeneous customers, and develops a data-driven algorithm to learn parameters and optimize the platform's objective over time.
This paper is the first to study a dynamic assortment problem in which both sides' choice parameters are unknown.
Keywords
Before reading this…
Applications
- →Service platforms
- →E-commerce
To understand this paper, make sure you know these concepts first:
- Choice modelsfind papers →
- Dynamic optimizationfind papers →
Abstract
More Like ThisWe study a dynamic assortment problem on a two-sided service platform with incomplete information and heterogeneous customers in a discrete-time setting. In each period, a customer arrives seeking service, and the platform chooses an assortment of sellers to display. The customer then proposes a transaction to at most one seller in the assortment according to a multinomial logit choice model. After a fixed number of periods, sellers review the proposals they have received and each chooses at most one customer according to another multinomial logit choice model, after which the cycle repeats. A key challenge is that the platform does not know the choice-model parameters of either customers or sellers in advance. To our knowledge, this is the first study of a dynamic assortment problem in which both sides' choice parameters are unknown. We develop a data-driven algorithm that learns these parameters while optimizing the platform's objective over time. We evaluate performance using regret, which measures revenue loss relative to a clairvoyant benchmark that knows all parameters and customer arrivals in advance. We show that the algorithm's worst-case regret grows polylogarithmically over time, and we derive a matching lower bound, establishing its rate optimality.