Sequential Mechanisms with Ex Post Individual Rationality

Abstract

Online multiproduct sellers increasingly use interactive selling strategies to customize their offers to individual buyers. For example, a seller may adjust the prices of products dynamically based on user interaction and offer discounts for buying bundles of products. What selling strategy should such a seller use to maximize profit? In “Sequential Mechanisms with ex Post Individual Rationality,” I. Ashlagi, C. Daskalakis, and N. Haghpanah provide a recursive characterization of the optimal selling strategy. This characterization is used to identify conditions under which the ability to bundle products is less profitable for the seller than the ability to adjust prices dynamically.