ALTERNATING GRADIENT-TYPE ALGORITHM FOR BILEVEL OPTIMIZATION WITH INEXACT LOWER-LEVEL SOLUTIONS VIA MOREAU ENVELOPE–BASED REFORMULATION

In this paper, we study a class of bilevel optimization problems where the lower-level problem is a convex composite optimization model, which arises in various applications, including bilevel hyperparameter selection for regularized regression models. To solve these problems, we propose an alternating gradient–type algorithm with inexact lower-level solutions (AGILS) based on a Moreau envelope–based reformulation of the bilevel optimization problem. The proposed algorithm does not require exact solutions of the lower-level problem at each iteration, improving computational efficiency. We prove the convergence of AGILS to stationary points and, under the Kurdyka–Łojasiewicz property, establish its sequential convergence. Numerical experiments, including a toy example and a bilevel hyperparameter selection problem for the sparse group Lasso model, demonstrate the effectiveness of the proposed AGILS. © 2026 Society for Industrial and Applied Mathematics.