Efficient Selection of Binary Choice Bundles with Cost Considerations

Tech Report Number
584

 

Abstract

We consider the problem of a consumer wishing to evaluate bundles of options from a list of N independently selectable binary options. The consumer’s goal is to find the t best bundles out of the 2N possible bundle subsets, when ranked according to supplied utility and cost functions. Although 2N is very large (e.g., for N = 100, 2N ≈ 1030), we show how this can be done quickly and efficiently. As an example, for N = 100 and t about one billion, a computer program virtually evaluated all 2N possible bundles in less than a minute, with a 92% rate of calculation efficiency.

Key words: Subset selection, option selection, binary choices, bundles

 

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