This course will expose students to modeling and optimization techniques which can be used to design the firm-market interface. In particular, this interface can take two forms:
- Revenue management: How to sell the right product to the right customer at the right time for the right price.
- Marketplace design: Determining who gets what and why (and at what price) in two-sided platform marketplaces.
We will draw on a rich body of research spanning three disciplines - operations management, economics and computer science - and study a collection of related (yet diverse) mathematical models and techniques. The models we cover have proved successful in practice across various industries; however, given the transformations brought about by the advent of online commerce and increased use of smartphones, our aim is to provide students with tools that generalize to new domains.
Lectures: TR 11.40pm-12.55pm, Thurston 205, map
Instructor: Sid Banerjee, 229 Rhodes Hall, email
There is no required textbook for the course; we will cover materials from a variety of sources, and relevant notes and references will be uploaded here and on Piazza. For interested students, here are some recommended books.
- For revenue management:
- For market design:
- For a less technical overview of the history, organizing principles, and applications of pricing and revenue management:
- Lecture 1: Introduction [slides]
- Lecture 2: Single fare-class capacity allocation (Littlewood’s Law) [slides]
- Lecture 3: Intro to dynamic programming [slides]
- Lecture 4-7: Multiple fare-class capacity allocation [slides]
- [Notes]: Optimality of protection-levels
- [Notes]: Computing protection levels
- Lecture 8: Intro to network revenue management [slides]
- Lecture 9: The Network RM Dynamic Program [slides]
- Lecture 10: LP approximation for single-resource settings [Notes]
- Lecture 11: Convexity and LP-based Approximations [Notes]
- Lecture 12: LP-duality and bid prices for network RM [Notes]
- Lecture 12.5: Snow day…
- Lecture 13: Model mismatch and the spiral-down effect [Notes]
- Lecture 14: Choice Models
- Lecture 15: Assortment Optimization under the MNL model [Notes]
- Lecture 16,17: Constrained assortment optimization under MNL [Notes]
- Lecture 18: Strategic models and mechanism design [Notes]
- Lecture 19,20: Single-parameter settings and Myerson’s Lemma [Notes]
- Lecture 21,22: Optimal revenue mechanisms [notes]
- Lecture 23,24: Pricing in two-sided marketplaces [Notes]
- Lecture 25: Course summary, and beyond… [Notes]