Near-optimal asymmetric binary matrix partitions

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We study the asymmetric binary matrix partition problem that was recently introduced by Alon et al. (WINE 2013) to model the impact of asymmetric information on the revenue of the seller in take-it-or-leave-it sales. Instances of the problem consist of an n × m binary matrix A and a probability distribution over its columns. A partition scheme B=(B₁,...,Bₙ) consists of a partition Bᵢ for each row i of A. The partition Bᵢ acts as a smoothing operator on row i that distributes the expected value of each partition subset proportionally to all its entries. Given a scheme B that induces a smooth matrix Aᵇ, the partition value is the expected maximum column entry of Aᵇ. The objective is to find a partition scheme such that the resulting partition value is maximized. We present a 9/10-approximation algorithm for the case where the probability distribution is uniform and a (1-1/e)-approximation algorithm for non-uniform distributions, significantly improving results of Alon et al. Although our first algorithm is combinatorial (and very simple), the analysis is based on linear programming and duality arguments. In our second result we exploit a nice relation of the problem to submodular welfare maximization.