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Model Selection in an Information Economy: Choosing what to Learn

dc.contributor.authorBrooks, Christopher H.
dc.contributor.authorGazzale, Robert S.
dc.contributor.authorDas, Rajarshi
dc.contributor.authorKephart, Jeffrey O.
dc.contributor.authorMacKie-Mason, Jeffrey K.
dc.contributor.authorDurfee, Edmund H.
dc.date.accessioned2007-04-10T20:03:41Z
dc.date.available2007-04-10T20:03:41Z
dc.date.issued2002-11
dc.identifier.citationComputational Intelligence, vol. 18, no. 4 (Nov. 2002): 566-582. <http://hdl.handle.net/2027.42/50438>en
dc.identifier.urihttps://hdl.handle.net/2027.42/50438
dc.description.abstractIn an economy in which a producer must learn the preferences of a consumer population, it is faced with a classic decision problem: when to explore and when to exploit. If the producer has a limited number of chances to experiment, it must explicitly consider the cost of learning (in terms of foregone profit) against the value of the information acquired. Information goods add an additional dimension to this problem; due to their flexibility, they can be bundled and priced according to a number of different price schedules. An optimizing producer should consider the profit each price schedule can extract, as well as the difficulty of learning of this schedule. In this paper, we demonstrate the tradeoff between complexity and profitability for a number of common price schedules. We begin with a one-shot decision as to which schedule to learn. Schedules with moderate complexity are preferred in the short and medium term, as they are learned quickly, yet extract a significant fraction of the available profit. We then turn to the repeated version of this one-shot decision and show that moderate complexity schedules, in particular two-part tariff, perform well when the producer must adapt to nonstationarity in the consumer population. When a producer can dynamically change schedules as it learns, it can use an explicit decision-theoretic formulation to greedily select the schedule which appears to yield the greatest profit in the next period.en
dc.format.extent225806 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.titleModel Selection in an Information Economy: Choosing what to Learnen
dc.typeArticleen_US
dc.subject.hlbsecondlevelInformation and Library Science
dc.subject.hlbtoplevelSocial Sciences
dc.contributor.affiliationumInformation, School ofen
dc.contributor.affiliationumcampusAnn Arboren
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/50438/1/comp-intel.pdfen_US
dc.owningcollnameInformation, School of (SI)


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