Title: Thompson Sampling for Online Personalized Assortment Optimization Problems with Multinomial Logit Choice Models
Abstract:Motivated by online retail applications, we study the online personalized assortment optimization problem. A seller conducts sales by offering assortments of products to a stream of arriving customers...Motivated by online retail applications, we study the online personalized assortment optimization problem. A seller conducts sales by offering assortments of products to a stream of arriving customers. The customers' purchase behavior follows their respective personalized Multinomial Logit choice models, which vary according to their individual attributes. The seller aims to maximize his revenue by offering personalized assortments to the customers, notwithstanding his uncertainty about the customers' choice models. We propose a Thompson Sampling based policy, policy Pao-Ts, where surrogate models for the latent choice models are constructed using samples from a progressively updated posterior distribution. We derive bounds on the revenue loss, namely Bayesian regret, incurred by policy Pao-Ts, in comparison to the optimal policy which is provided with the latent models. The regret bounds hold even when the customers' attributes vary arbitrarily, but not independently and identically distributed.Read More
Publication Year: 2017
Publication Date: 2017-01-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 46
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