Social welfare and profit maximization from revealed preferences

DOI10.1007/978-3-030-04612-5_18MaRDI QIDQ2190403zbMATH OpenOpenAlexFDO

Authors Ziwei Ji, Ruta Mehta, Matus Telgarsky

Publication date 18 June 2020

Full work available at URL https://arxiv.org/abs/1711.02211

zbMATH Keywords

social welfare maximizationconsumer theorysubgradient-based algorithm

Mathematics Subject Classification ID

Individual preferences (91B08) Consumer behavior, demand theory (91B42) Welfare economics (91B15)

Abstract: Consider the seller's problem of finding optimal prices for her $n$ (divisible) goods when faced with a set of $m$ consumers, given that she can only observe their purchased bundles at posted prices, i.e., revealed preferences. We study both social welfare and profit maximization with revealed preferences. Although social welfare maximization is a seemingly non-convex optimization problem in prices, we show that (i) it can be reduced to a dual convex optimization problem in prices, and (ii) the revealed preferences can be interpreted as supergradients of the concave conjugate of valuation, with which subgradients of the dual function can be computed. We thereby obtain a simple subgradient-based algorithm for strongly concave valuations and convex cost, with query complexity $O(m^2/epsilo{n}^2)$, where $epsilon$ is the additive difference between the social welfare induced by our algorithm and the optimum social welfare. We also study social welfare maximization under the online setting, specifically the random permutation model, where consumers arrive one-by-one in a random order. For the case where consumer valuations can be arbitrary continuous functions, we propose a price posting mechanism that achieves an expected social welfare up to an additive factor of $O(sqrtmn)$ from the maximum social welfare. Finally, for profit maximization (which may be non-convex in simple cases), we give nearly matching upper and lower bounds on the query complexity for separable valuations and cost (i.e., each good can be treated independently).

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Cited in

(14)

• scientific article; zbMATH DE number 5144161 (Why is no real title available?)
• Social Preferences and the Provision of Public Goods
• Welfare maximization with production costs: a primal dual approach
• Welfare-domination under preference-replacement: a survey and open questions
• The implicit welfare weights used when maximizing aggregate surplus
• The implicit bias of gradient descent on separable data
• Nonseparable preferences and optimal social security systems
• Social objectives in general equilibrium
• Spurious valleys in one-hidden-layer neural network optimization landscapes
• Applications of Optimization Theory to Social Benefit Maximizations in Macroeconomics with Uncertainty
• Relief maximization and rationality
• Social optimality in the constructed-capital model
• Learning economic parameters from revealed preferences
• Supply function equilibria and nonprofit-maximizing objectives

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