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Jackie Baek

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3 published item(s)

preprint2026arXiv

Misspecified Explore-then-Exploit Leads to Supra-Competitive Prices

We study whether simple algorithmic pricing systems can systematically produce collusive-like prices in multi-firm markets. We consider firms using an explore-then-exploit pipeline: they randomize prices during an initial exploration phase, then estimate demand from their own historical data and set prices myopically thereafter. The estimation step relies on a misspecified, monopoly-style model that omits competitors' prices. We characterize when this pipeline converges to supra-competitive prices above the Nash equilibrium, via a fluid-limit ordinary differential equation analysis. We show that supra-competitive prices arise when firms explore within similar price ranges on the same side of the Nash price. Moreover, prices can be substantially above the Nash price; we show that prices can reach monopoly levels under symmetric exploration. Simulations calibrated to a real multifamily rental market confirm that supra-competitive outcomes arise robustly beyond our theoretical assumptions, including under finite horizons, heterogeneous products, and nonlinear logit demand.

preprint2025arXiv

Personalized Promotions in Practice: Dynamic Allocation and Reference Effects

Partnering with a large online retailer, we consider the problem of sending daily personalized promotions to a userbase of over 20 million customers. We propose an efficient policy for determining, every day, the promotion that each customer should receive (10%, 12%, 15%, 17%, or 20% off), while respecting global allocation constraints. This policy was successfully deployed to see a 4.5% revenue increase during an A/B test, by better targeting promotion-sensitive customers and also learning intertemporal patterns across customers. We also consider theoretically modeling the intertemporal state of the customer. The data suggests a simple new combinatorial model of pricing with reference effects, where the customer remembers the best promotion they saw over the past $\ell$ days as the "reference value", and is more likely to purchase if this value is poor. We tightly characterize the structure of optimal policies for maximizing long-run average revenue under this model -- they cycle between offering poor promotion values $\ell$ times and offering good values once.

preprint2022arXiv

Fair Exploration via Axiomatic Bargaining

Exploration is often necessary in online learning to maximize long-term reward, but it comes at the cost of short-term 'regret'. We study how this cost of exploration is shared across multiple groups. For example, in a clinical trial setting, patients who are assigned a sub-optimal treatment effectively incur the cost of exploration. When patients are associated with natural groups on the basis of, say, race or age, it is natural to ask whether the cost of exploration borne by any single group is 'fair'. So motivated, we introduce the 'grouped' bandit model. We leverage the theory of axiomatic bargaining, and the Nash bargaining solution in particular, to formalize what might constitute a fair division of the cost of exploration across groups. On the one hand, we show that any regret-optimal policy strikingly results in the least fair outcome: such policies will perversely leverage the most 'disadvantaged' groups when they can. More constructively, we derive policies that are optimally fair and simultaneously enjoy a small 'price of fairness'. We illustrate the relative merits of our algorithmic framework with a case study on contextual bandits for warfarin dosing where we are concerned with the cost of exploration across multiple races and age groups.