speaker: Ming Hu | Prof., University of Toronto

Keys: random product offering/demand allocation/pricing algorithm.

TALK ABSTRACT:

First, we study blind boxes as a novel selling mechanism in which buyers purchase sealed packages containing unknown items, with the chance of uncovering rare or special items. We show how such product randomization introduced by the blind box can improve the seller’s profitability over traditional separate selling. Second, we study how an e-commerce platform should assign sequentially arriving customers to sellers who compete to sell identical products on the platform. The allocation rule may be random and dependent on the sellers’ inventory levels. We show how such demand fulfillment randomization can incentivize sellers to hold more inventory and improve the platform’s profitability and customer welfare. Third, we study randomized promotions in which the firm randomly offers discounts over time to sequentially arriving customers with heterogeneous valuations and patience levels. We show how price randomization can improve the firm’s profitability beyond deterministic pricing policies.

featured papers:

  1. Optimizing Rarity: The Economics of Blind Boxes with Random Items. Ming Hu, Taojie Qin, Shreyas Sekar.
  2. Algorithmic demand allocation to heterogeneous sellers in inventory competition. Shengyu Cao, Ming Hu.
  3. Intertemporal price discrimination via randomized promotions. Hongqiao Chen, Ming Hu, Jiahua Wu. MSOM, 25(3).