The Empirical Revenue Maximization (ERM) is one of the most important price learning algorithms in auction design: as the literature shows it can learn approximately optimal reserve prices for revenue-maximizing auctioneers in both repeated auctions and uniform-price auctions. However, in these applications the agents who provide inputs to ERM have incentives to manipulate the inputs to lower the outputted price. We generalize the definition of an incentive-awareness measure proposed by Lavi et al (2019), to quantify the reduction of ERM's outputted price due to a change of $m\ge 1$ out of $N$ input samples, and provide specific convergence rates of this measure to zero as $N$ goes to infinity for different types of input distributions. By adopting this measure, we construct an efficient, approximately incentive-compatible, and revenue-optimal learning algorithm using ERM in repeated auctions against non-myopic bidders, and show approximate group incentive-compatibility in uniform-price auctions.
Machine learning has proved to be very successful for making predictions in travel behavior modeling. However, most machine-learning models have complex model structures and offer little or no explanation as to how they arrive at these predictions. Interpretations about travel behavior models are essential for decision makers to understand travelers' preferences and plan policy interventions accordingly. Therefore, this paper proposes to apply and extend the model distillation approach, a model-agnostic machine-learning interpretation method, to explain how a black-box travel mode choice model makes predictions for the entire population and subpopulations of interest. Model distillation aims at compressing knowledge from a complex model (teacher) into an understandable and interpretable model (student). In particular, the paper integrates model distillation with market segmentation to generate more insights by accounting for heterogeneity. Furthermore, the paper provides a comprehensive comparison of student models with the benchmark model (decision tree) and the teacher model (gradient boosting trees) to quantify the fidelity and accuracy of the students' interpretations.
Recent years have witnessed an increased focus on interpretability and the use of machine learning to inform policy analysis and decision making. This paper applies machine learning to examine travel behavior and, in particular, on modeling changes in travel modes when individuals are presented with a novel (on-demand) mobility option. It addresses the following question: Can machine learning be applied to model individual taste heterogeneity (preference heterogeneity for travel modes and response heterogeneity to travel attributes) in travel mode choice? This paper first develops a high-accuracy classifier to predict mode-switching behavior under a hypothetical Mobility-on-Demand Transit system (i.e., stated-preference data), which represents the case study underlying this research. We show that this classifier naturally captures individual heterogeneity available in the data. Moreover, the paper derives insights on heterogeneous switching behaviors through the generation of marginal effects and elasticities by current travel mode, partial dependence plots, and individual conditional expectation plots. The paper also proposes two new model-agnostic interpretation tools for machine learning, i.e., conditional partial dependence plots and conditional individual partial dependence plots, specifically designed to examine response heterogeneity. The results on the case study show that the machine-learning classifier, together with model-agnostic interpretation tools, provides valuable insights on travel mode switching behavior for different individuals and population segments. For example, the existing drivers are more sensitive to additional pickups than people using other travel modes, and current transit users are generally willing to share rides but reluctant to take any additional transfers.
We address a practical problem ubiquitous in modern industry, in which a mediator tries to learn a policy for allocating strategic financial incentives for customers in a marketing campaign and observes only bandit feedback. In contrast to traditional policy optimization frameworks, we rely on a specific assumption for the reward structure and we incorporate budget constraints. We develop a new two-step method for solving this constrained counterfactual policy optimization problem. First, we cast the reward estimation problem as a domain adaptation problem with supplementary structure. Subsequently, the estimators are used for optimizing the policy with constraints. We establish theoretical error bounds for our estimation procedure and we empirically show that the approach leads to significant improvement on both synthetic and real datasets.
Uplift modeling aims to directly model the incremental impact of a treatment on an individual response. It has been widely and successfully used in healthcare analytics and business operations, where one tries to measure the net effect of a new medicine on patients or to understand the impact of a marketing campaign on company revenue. In this work, we address the problem from a new angle and reformulate it as a Markov Decision Process (MDP). This new formulation allows us to handle the lack of explicit labels, to deal with any number of actions (in comparison to the normal two action uplift modeling), and to apply it to applications with responses of general types, which is a challenging task for previous methods. Furthermore, we also design an unbiased metric for more accurate offline evaluation of uplift effects, set up a better reward function for the policy gradient method to solve the problem and adopt some action-based baselines to reduce variance. We conducted extensive experiments on both a synthetic dataset and real-world scenarios, and showed that our method can achieve significant improvement over previous methods.
Logit models are usually applied when studying individual travel behavior, i.e., to predict travel mode choice and to gain behavioral insights on traveler preferences. Recently, some studies have applied machine learning to model travel mode choice and reported higher out-of-sample prediction accuracy than conventional logit models (e.g., multinomial logit). However, there has not been a comprehensive comparison between logit models and machine learning that covers both prediction and behavioral analysis. This paper aims at addressing this gap by examining the key differences in model development, evaluation, and behavioral interpretation between logit and machine-learning models for travel-mode choice modeling. To complement the theoretical discussions, we also empirically evaluated the two approaches on stated-preference survey data for a new type of transit system integrating high-frequency fixed routes and micro-transit. The results show that machine learning can produce significantly higher predictive accuracy than logit models and are better at capturing the nonlinear relationships between trip attributes and mode-choice outcomes. On the other hand, compared to the multinomial logit model, the best-performing machine-learning model, the random forest model, produces less reasonable behavioral outputs (i.e. marginal effects and elasticities) when they were computed from a standard approach. By introducing some behavioral constraints into the computation of behavioral outputs from a random forest model, however, we obtained better results that are somewhat comparable with the multinomial logit model. We believe that there is great potential in merging ideas from machine learning and conventional statistical methods to develop refined models for travel-behavior research and suggest some possible research directions.
Internet market makers are always facing intense competitive environment, where personalized price reductions or discounted coupons are provided for attracting more customers. Participants in such a price war scenario have to invest a lot to catch up with other competitors. However, such a huge cost of money may not always lead to an improvement of market share. This is mainly due to a lack of information about others' strategies or customers' willingness when participants develop their strategies. In order to obtain this hidden information through observable data, we study the relationship between companies and customers in the Internet price war. Theoretically, we provide a formalization of the problem as a stochastic game with imperfect and incomplete information. Then we develop a variant of Latent Dirichlet Allocation (LDA) to infer latent variables under the current market environment, which represents the preferences of customers and strategies of competitors. To our best knowledge, it is the first time that LDA is applied to game scenario. We conduct simulated experiments where our LDA model exhibits a significant improvement on finding strategies in the Internet price war by including all available market information of the market maker's competitors. And the model is applied to an open dataset for real business. Through comparisons on the likelihood of prediction for users' behavior and distribution distance between inferred opponent's strategy and the real one, our model is shown to be able to provide a better understanding for the market environment. Our work marks a successful learning method to infer latent information in the environment of price war by the LDA modeling, and sets an example for related competitive applications to follow.
Convolutional neural networks have recently been used for multi-focus image fusion. However, due to the lack of labeled data for supervised training of such networks, existing methods have resorted to adding Gaussian blur in focused images to simulate defocus and generate synthetic training data with ground-truth for supervised learning. Moreover, they classify pixels as focused or defocused and leverage the results to construct the fusion weight maps which then necessitates a series of post-processing steps. In this paper, we present unsupervised end-to-end learning for directly predicting the fully focused output image from multi-focus input image pairs. The proposed approach uses a novel CNN architecture trained to perform fusion without the need for ground truth fused images and exploits the image structural similarity (SSIM) to calculate the loss; a metric that is widely accepted for fused image quality evaluation. Consequently, we are able to utilize {\em real} benchmark datasets, instead of simulated ones, to train our network. The model is a feed-forward, fully convolutional neural network that can process images of variable sizes during test time. Extensive evaluations on benchmark datasets show that our method outperforms existing state-of-the-art in terms of visual quality and objective evaluations.
Detecting representative frames in videos based on human actions is quite challenging because of the combined factors of human pose in action and the background. This paper addresses this problem and formulates the key frame detection as one of finding the video frames that optimally maximally contribute to differentiating the underlying action category from all other categories. To this end, we introduce a deep two-stream ConvNet for key frame detection in videos that learns to directly predict the location of key frames. Our key idea is to automatically generate labeled data for the CNN learning using a supervised linear discriminant method. While the training data is generated taking many different human action videos into account, the trained CNN can predict the importance of frames from a single video. We specify a new ConvNet framework, consisting of a summarizer and discriminator. The summarizer is a two-stream ConvNet aimed at, first, capturing the appearance and motion features of video frames, and then encoding the obtained appearance and motion features for video representation. The discriminator is a fitting function aimed at distinguishing between the key frames and others in the video. We conduct experiments on a challenging human action dataset UCF101 and show that our method can detect key frames with high accuracy.
A collaborative filtering system recommends to users products that similar users like. Collaborative filtering systems influence purchase decisions, and hence have become targets of manipulation by unscrupulous vendors. We provide theoretical and empirical results demonstrating that while common nearest neighbor algorithms, which are widely used in commercial systems, can be highly susceptible to manipulation, two classes of collaborative filtering algorithms which we refer to as linear and asymptotically linear are relatively robust. These results provide guidance for the design of future collaborative filtering systems.