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Register a new userLoyalty Programs in the Sharing Economy: Optimality and Competition
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Added by
Zhixuan Fang
Publication date
2018
fields
Informatics Engineering
and research's language is
English
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Loyalty programs are important tools for sharing platforms seeking to grow supply. Online sharing platforms use loyalty programs to heavily subsidize resource providers, encouraging participation and boosting supply. As the sharing economy has evolved and competition has increased, the design of loyalty programs has begun to play a crucial role in the pursuit of maximal revenue. In this paper, we first characterize the optimal loyalty program for a platform with homogeneous users. We then show that optimal revenue in a heterogeneous market can be achieved by a class of multi-threshold loyalty program (MTLP) which admits a simple implementation-friendly structure. We also study the performance of loyalty programs in a setting with two competing sharing platforms, showing that the degree of heterogeneity is a crucial factor for both loyalty programs and pricing strategies. Our results show that sophisticated loyalty programs that reward suppliers via stepwise linear functions outperform simple sign-up bonuses, which give them a one time reward for participating.
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The growth of the sharing economy is driven by the emergence of sharing platforms, e.g., Uber and Lyft, that match owners looking to share their resources with customers looking to rent them. The design of such platforms is a complex mixture of economics and engineering, and how to optimally design such platforms is still an open problem. In this paper, we focus on the design of prices and subsidies in sharing platforms. Our results provide insights into the tradeoff between revenue maximizing prices and social welfare maximizing prices. Specifically, we introduce a novel model of sharing platforms and characterize the profit and social welfare maximizing prices in this model. Further, we bound the efficiency loss under profit maximizing prices, showing that there is a strong alignment between profit and efficiency in practical settings. Our results highlight that the revenue of platforms may be limited in practice due to supply shortages; thus platforms have a strong incentive to encourage sharing via subsidies. We provide an analytic characterization of when such subsidies are valuable and show how to optimize the size of the subsidy provided. Finally, we validate the insights from our analysis using data from Didi Chuxing, the largest ridesharing platform in China.
Sharing economy platforms have become extremely popular in the last few years, and they have changed the way in which we commute, travel, and borrow among many other activities. Despite their popularity among consumers, such companies are poorly regulated. For example, Airbnb, one of the most successful examples of sharing economy platform, is often criticized by regulators and policy makers. While, in theory, municipalities should regulate the emergence of Airbnb through evidence-based policy making, in practice, they engage in a false dichotomy: some municipalities allow the business without imposing any regulation, while others ban it altogether. That is because there is no evidence upon which to draft policies. Here we propose to gather evidence from the Web. After crawling Airbnb data for the entire city of London, we find out where and when Airbnb listings are offered and, by matching such listing information with census and hotel data, we determine the socio-economic conditions of the areas that actually benefit from the hospitality platform. The reality is more nuanced than one would expect, and it has changed over the years. Airbnb demand and offering have changed over time, and traditional regulations have not been able to respond to those changes. That is why, finally, we rely on our data analysis to envision regulations that are responsive to real-time demands, contributing to the emerging idea of algorithmic regulation.
The auction theory literature has so far focused mostly on the design of mechanisms that takes the revenue or the efficiency as a yardstick. However, scenarios where the {it capacity}, which we define as textit{``the number of bidders the auctioneer wants to have a positive probability of getting the item}, is a fundamental concern are ubiquitous in the information economy. For instance, in sponsored search auctions (SSAs) or in online ad-exchanges, the true value of an ad-slot for an advertiser is inherently derived from the conversion-rate, which in turn depends on whether the advertiser actually obtained the ad-slot or not; thus, unless the capacity of the underlying auction is large, key parameters, such as true valuations and advertiser-specific conversion rates, will remain unknown or uncertain leading to inherent inefficiencies in the system. In general, the same holds true for all information goods/digital goods. We initiate a study of mechanisms, which take capacity as a yardstick, in addition to revenue/efficiency. We show that in the case of a single indivisible item one simple way to incorporate capacity constraints is via designing mechanisms to sell probability distributions, and that under certain conditions, such optimal probability distributions could be identified using a Linear programming approach. We define a quantity called {it price of capacity} to capture the tradeoff between capacity and revenue/efficiency. We also study the case of sponsored search auctions. Finally, we discuss how general such an approach via probability spikes can be made, and potential directions for future investigations.
We consider the use of cost sharing in the Aspnes model of network inoculation, showing that this can improve the cost of the optimal equilibrium by a factor of $O(sqrt{n})$ in a network of $n$ nodes.
Federated learning is a distributed learning paradigm where multiple agents, each only with access to local data, jointly learn a global model. There has recently been an explosion of research aiming not only to improve the accuracy rates of federated learning, but also provide certain guarantees around social good properties such as total error. One branch of this research has taken a game-theoretic approach, and in particular, prior work has viewed federated learning as a hedonic game, where error-minimizing players arrange themselves into federating coalitions. This past work proves the existence of stable coalition partitions, but leaves open a wide range of questions, including how far from optimal these stable solutions are. In this work, we motivate and define a notion of optimality given by the average error rates among federating agents (players). First, we provide and prove the correctness of an efficient algorithm to calculate an optimal (error minimizing) arrangement of players. Next, we analyze the relationship between the stability and optimality of an arrangement. First, we show that for some regions of parameter space, all stable arrangements are optimal (Price of Anarchy equal to 1). However, we show this is not true for all settings: there exist examples of stable arrangements with higher cost than optimal (Price of Anarchy greater than 1). Finally, we give the first constant-factor bound on the performance gap between stability and optimality, proving that the total error of the worst stable solution can be no higher than 9 times the total error of an optimal solution (Price of Anarchy bound of 9).
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