Profit Maximization in Bilateral Trade against a Smooth Adversary
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arXiv
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| Autori principali: | , , , |
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| Natura: | Preprint |
| Pubblicazione: |
2026
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| _version_ | 1866917488445358080 |
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| author | Di Gregorio, Simone Dütting, Paul Fusco, Federico Schwiegelshohn, Chris |
| author_facet | Di Gregorio, Simone Dütting, Paul Fusco, Federico Schwiegelshohn, Chris |
| contents | Bilateral trade models the task of intermediating between two strategic agents, a seller and a buyer, who wish to trade a good. We study this problem from the perspective of a profit-maximizing broker within an online learning framework, where the agents' valuations are generated by a smooth adversary.
We devise a learning algorithm that guarantees a $\tilde{O}(\sqrt{T})$ regret bound, which is tight in the time horizon $T$ up to poly-logarithmic factors. This matches the minimax rate for the stochastic i.i.d. case, and is also well separated from the adversarial setting, where sublinear-regret is unattainable. By extending the strong regret guarantees from the i.i.d. case to the smooth adversary, we significantly broaden the scope of settings where such fast rate is achievable, while closing an important gap in the regret landscape of this fundamental economic problem.
To overcome the challenges posed by this adversary, we leverage a continuity property of smooth instances and combines this with a hierarchical net-construction of the broker's action space, which is analyzed via algorithmic chaining. We showcase the applicability of these techniques by deriving a similarly tight $\tilde{O}(\sqrt{T})$ regret bound for a related mechanism design model: the joint ads problem. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2605_12664 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Profit Maximization in Bilateral Trade against a Smooth Adversary Di Gregorio, Simone Dütting, Paul Fusco, Federico Schwiegelshohn, Chris Computer Science and Game Theory Machine Learning Bilateral trade models the task of intermediating between two strategic agents, a seller and a buyer, who wish to trade a good. We study this problem from the perspective of a profit-maximizing broker within an online learning framework, where the agents' valuations are generated by a smooth adversary. We devise a learning algorithm that guarantees a $\tilde{O}(\sqrt{T})$ regret bound, which is tight in the time horizon $T$ up to poly-logarithmic factors. This matches the minimax rate for the stochastic i.i.d. case, and is also well separated from the adversarial setting, where sublinear-regret is unattainable. By extending the strong regret guarantees from the i.i.d. case to the smooth adversary, we significantly broaden the scope of settings where such fast rate is achievable, while closing an important gap in the regret landscape of this fundamental economic problem. To overcome the challenges posed by this adversary, we leverage a continuity property of smooth instances and combines this with a hierarchical net-construction of the broker's action space, which is analyzed via algorithmic chaining. We showcase the applicability of these techniques by deriving a similarly tight $\tilde{O}(\sqrt{T})$ regret bound for a related mechanism design model: the joint ads problem. |
| title | Profit Maximization in Bilateral Trade against a Smooth Adversary |
| topic | Computer Science and Game Theory Machine Learning |
| url | https://arxiv.org/abs/2605.12664 |