BasicPricingPrincipletheInternet.pptVIP

How to Set a Price? C. Common pricing methods in the internet Dynamic pricing ? Two part tariff (5.5.2) ? Optional two-part tariff ? Flat-rate pricing (7.5) ? Bargaining (7.2) Shapley value (7.1.3) Paris Metro pricing * Bargaining (7.2) * Table rule: The bargain ends when both ‘players’ accept the price Utility of both ‘players’ discounts by time Could talk about this at later presentations! Is = ? Else propose ……. Shapley value (7.1.3) Principle: a mechanism to distribute revenue/cost among several actors in the system Eg. No example…. Intuitive meaning: for each permutation of the actors, find the marginal utility gain for each additional player added into the system. The resultant value is then normalized * Shapley value (7.1.3) Permutation A B C D A B C D 0 0 0 2 A B D C 0 0 1 1 A C B D 0 0 0 2 A C D B 0 1 0 1 A D C B 0 1 1 0 A D B C 0 1 1 0 B A C D 0 0 0 2 B A D C 0 0 1 1 B C A D 0 0 0 2 B C D A 2 0 0 0 B D A C 1 0 1 0 B D C A 2 0 0 0 C A B D 0 0 0 2 …… * A B C D Mission: A?D 33% 33% 16.5% 16.5% Shapley value (7.1.3) Axioms: Dummy if v(S U i) – v(S) = 0, then φi(v) = 0 Symmetry if i, j symmetic, then φi(v) = φj(v) Additively φi(v + w) = φi(v) + φi(w) Efficiency There exists a unique value that satisfy the above four axioms, which is the Shapley value * Shapley value (7.1.3) Advantages: Fair (supposingly) Disadvantages: Value must be calculated centrally Impossible to implement in large scale * How to Set a Price? C. Common pricing methods in the internet Dynamic pricing ? Two part tariff (5.5.2) ? Optional two-part tariff ? Flat-rate pricing (7.5) ? Bargaining (7.2) ? Shapley value (7.1.3) ? Paris Metro pricing * Paris Metro pricing Principle: by dividing the internet into different separate channels with different prices, channels with higher price would attract less traffic and hence provide better service Intuition: first class in trains always have seats (more expensive) if