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Reinforcement learning applications in dynamic pricing of retail markets

Raju, CVL and Narahari, Y and Ravikumar, K (2003) Reinforcement learning applications in dynamic pricing of retail markets. In: IEEE International Conference on E-Commerce (CEC 2003), 24-27 June 2003, Newport Beach, California.

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In this paper, we investigate the use of reinforcement learning (RL) techniques to the problem of determining dynamic prices in an electronic retail market. As representative models, we consider a single seller market and a two seller market, and formulate the dynamic pricing problem in a setting that easily generalizes to markets with more than two sellers. We first formulate the single seller dynamic pricing problem in the RL framework and solve the problem using the Q-learning algorithm through simulation. Next we model the two seller dynamic pricing problem as a Markovian game and formulate the problem in the RL framework. We solve this problem using actor-critic algorithms through simulation. We believe our approach to solving these problems is a promising way of setting dynamic prices in multi-agent environments. We illustrate the methodology with two illustrative examples of typical retail markets.

Item Type: Conference Paper
Publisher: IEEE
Additional Information: Copyright 2003 IEEE. Personal use of this material is permitted.However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE.
Department/Centre: Division of Electrical Sciences > Computer Science & Automation
Date Deposited: 16 Mar 2012 12:20
Last Modified: 16 Mar 2012 12:20
URI: http://eprints.iisc.ac.in/id/eprint/43792

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