1 Answers
In economics, a unit demand agent is an agent who wants to buy a single item, which may be of one of different types. A typical example is a buyer who needs a new car. There are many different types of cars, but usually a buyer will choose only one of them, based on the quality and the price.
If there are m different item-types, then a unit-demand valuation function is typically represented by m values v 1 , … , v m {\displaystyle v_{1},\dots ,v_{m}} , with v j {\displaystyle v_{j}} representing the subjective value that the agent derives from item j {\displaystyle j}. If the agent receives a set A {\displaystyle A} of items, then his total utility is given by:
since he enjoys the most valuable item from A {\displaystyle A} and ignores the rest.
Therefore, if the price of item j {\displaystyle j} is p j {\displaystyle p_{j}} , then a unit-demand buyer will typically want to buy a single item – the item j {\displaystyle j} for which the net utility v j − p j {\displaystyle v_{j}-p_{j}} is maximized.