Linear Programming Based Near-Optimal Pricing for Laminar Bayesian Online Selection

TL;DR

This paper develops a polynomial-time approximation scheme for laminar Bayesian online selection problems, enabling near-optimal pricing strategies under hierarchical constraints, with applications to prophet inequalities.

Contribution

It introduces the first PTAS for laminar Bayesian online selection with constant-depth laminar matroids and extends the approach to production-constrained problems.

Findings

Achieves a PTAS for laminar matroids with constant depth

Extends LP-based approach to production-constrained problems

Re-derives classic prophet inequalities using the new technique

Abstract

The Bayesian online selection problem aims to design a pricing scheme for a sequence of arriving buyers that maximizes the expected social welfare (or revenue) subject to different structural constraints. Inspired by applications with a hierarchy of service, this paper focuses on the cases where a laminar matroid characterizes the set of served buyers. We give the first Polynomial-Time Approximation Scheme (PTAS) for the problem when the laminar matroid has constant depth. Our approach is based on rounding the solution of a hierarchy of linear programming relaxations that approximate the optimum online solution with any degree of accuracy, plus a concentration argument showing that rounding incurs a small loss. We also study another variation, which we call the production-constrained problem. The allowable set of served buyers is characterized by a collection of production and shipping constraints that form a particular example of a laminar matroid. Using a similar LP-based approach, we design a PTAS for this problem, although in this special case the depth of the underlying laminar matroid is not necessarily a constant. The analysis exploits the negative dependency of the optimum selection rule in the lower levels of the laminar family. Finally, to demonstrate the generality of our technique, we employ the linear programming-based approach employed in the paper to re-derive some of the classic prophet inequalities known in the literature -- as a side result.