Today I presented my research done in the context of my master's thesis. I presented a novel product pricing approach for the TAC SCM game, where products are sold through reverse auctions with sealed bids (i.e., traders bid on customer requests for quotes and cannot observe their competitors' pricing behavior).
The new approach is based on price distribution estimations, where the relation between on-line available data and distribution parameters is dynamically modeled using economic regimes (characterizing market conditions) and error terms (accounting for customer feedback). Given the parametric approximations of price distributions, acceptance probabilities are estimated using a closed-form mathematical expression. These probabilities that a customer accepts a price offered by a trader can be used to determine the price yielding a desired quota. The approach has been implemented in the MinneTAC agent and tested against a price-following product pricing method in the TAC SCM game. The novel approach significantly improves performance; more orders are obtained against higher prices. Profits more than double.
During the presentation, (adaptations to) the game specifications of the TAC SCM game were discussed in the group. We briefly discussed the possible impact of new entrants during a game, more competitors, and a randomized game length. Apparently, according to game theory, end-of-game effects would be reduced when the game end is randomized.
Alexander
Thursday, February 26, 2009
Thursday, February 19, 2009
Meeting Minutes - 18 February 2009
Today I discussed the main results of my master's thesis, in which I try to incorporate procurement information into an economic regime model based on sales information. This model is used in the MinneTAC agent, which is an artifical trading agent that competes in the TAC SCM game.
First, I gave a brief description of the TAC SCM game, after which I introduced the regime model as it is currently used in the MinneTAC agent. Then, I introduced a new procurement variable, i.e., offer prices, after which I elaborated on both regime identification and regime prediction. Finally, I discussed some experimental results.
During the last part of the presentation where I introduced some experimental results, we had a discussion on the causes of these results. As it seems, implementing procurement information into the regime model does not lead to better performance of the MinneTAC agent in TAC SCM games. In fact, the agent gets more orders from customers, but generates lower profits. Other competitors seem to take advantage of the situation, since their profits increase when MinneTAC uses the new regime model.
A suggested cause is the fact that there could be a delay regarding the procurement information. Procurement information might be a leading indicator for regimes, so perhaps creating a regime model based on the sales price of yesterday and the procurement offer price of for instance three days earlier could improve the performance of the agent. However, this is dependent on the cost allocation of the agent. Furthermore, there is a lack of adaptivity in the regime model and therefore, the model cannot adjust properly during a game. Finally, regime information is not used for price setting in the experiments discussed today. Establishing this connection between regimes and price setting could improve the overall results as well.
Frederik
First, I gave a brief description of the TAC SCM game, after which I introduced the regime model as it is currently used in the MinneTAC agent. Then, I introduced a new procurement variable, i.e., offer prices, after which I elaborated on both regime identification and regime prediction. Finally, I discussed some experimental results.
During the last part of the presentation where I introduced some experimental results, we had a discussion on the causes of these results. As it seems, implementing procurement information into the regime model does not lead to better performance of the MinneTAC agent in TAC SCM games. In fact, the agent gets more orders from customers, but generates lower profits. Other competitors seem to take advantage of the situation, since their profits increase when MinneTAC uses the new regime model.
A suggested cause is the fact that there could be a delay regarding the procurement information. Procurement information might be a leading indicator for regimes, so perhaps creating a regime model based on the sales price of yesterday and the procurement offer price of for instance three days earlier could improve the performance of the agent. However, this is dependent on the cost allocation of the agent. Furthermore, there is a lack of adaptivity in the regime model and therefore, the model cannot adjust properly during a game. Finally, regime information is not used for price setting in the experiments discussed today. Establishing this connection between regimes and price setting could improve the overall results as well.
Frederik
Thursday, February 12, 2009
Meeting Minutes – 11 February 2009
Today I presented some preliminary results of a research project that is intended to be part of my PhD thesis. I discussed an economic model of price competition between spatially organized firms. I discussed the Nash equilibrium solution of the model, but most of the time I focused on the outcomes achieved by so-called evolutionary dynamics. These outcomes were analyzed mathematically (partly analytically, partly numerically) but also through computer simulations. Interestingly, on average firms turned out to cooperate (or collude) with each other under the evolutionary dynamics.
We had a very fruitful discussion about the conditions necessary/sufficient to achieve the cooperative outcome, focusing in particular on the plausibility of various assumptions. We also discussed on a general level the methodology typically used in economic/game-theoretic research.
Ludo
We had a very fruitful discussion about the conditions necessary/sufficient to achieve the cooperative outcome, focusing in particular on the plausibility of various assumptions. We also discussed on a general level the methodology typically used in economic/game-theoretic research.
Ludo
Subscribe to:
Posts (Atom)