Article

Position Auctions with Bidder-Specific Minimum Prices

Authors:

Eyal Even-Dar,

Jon Feldman,

Yishay Mansour,

S. MuthukrishnanAuthors Info & Claims

WINE '08: Proceedings of the 4th International Workshop on Internet and Network Economics

Pages 577 - 584

https://doi.org/10.1007/978-3-540-92185-1_64

Published: 17 December 2008 Publication History

Abstract

Position auctions such as the Generalized Second Price (GSP) auction are in wide use for sponsored search, e.g., by Yahoo! and Google. We now have an understanding of the equilibria of these auctions, via game-theoretic concepts like Generalized English Auctions and the "locally envy-free" property, as well as through a relationship to the well-known, truthful Vickrey-Clarke-Groves (VCG) mechanism. In practice, however, position auctions are implemented with additional constraints, in particular, bidder-specific minimum prices are enforced by all major search engines. The minimum prices are used to control the quality of the ads that appear on the page.

We study the effect of bidder-specific minimum prices in position auctions with an emphasis on GSP. Some properties proved for standard GSP no longer hold in this setting. For example, we show that the GSP allocation is now not always efficient (in terms of advertiser value). Also, the property of "envy-locality" enjoyed by GSP--which is essential in the prior analysis of strategies and equilibria--no longer holds. Our main result is to show that despite losing envy locality, GSP with bidder-specific minimum prices still has an envy-free equilibrium. We conclude by studying the effect of bidder-specific minimum prices on VCG auctions.

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Cited By

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Gupta ASaha BSarkar U(2016)Systemic Concentration in Sponsored Search MarketsACM Transactions on Management Information Systems10.1145/29346957:2(1-26)Online publication date: 16-Aug-2016
https://dl.acm.org/doi/10.1145/2934695
Devanur NHuang ZPsomas CWichs DMansour Y(2016)The sample complexity of auctions with side informationProceedings of the forty-eighth annual ACM symposium on Theory of Computing10.1145/2897518.2897553(426-439)Online publication date: 19-Jun-2016
https://dl.acm.org/doi/10.1145/2897518.2897553
Yuan SWang JChen BMason PSeljan SMacskassy SPerlich CLeskovec JWang WGhani R(2014)An empirical study of reserve price optimisation in real-time biddingProceedings of the 20th ACM SIGKDD international conference on Knowledge discovery and data mining10.1145/2623330.2623357(1897-1906)Online publication date: 24-Aug-2014
https://dl.acm.org/doi/10.1145/2623330.2623357

Position Auctions with Bidder-Specific Minimum Prices
1. Applied computing
  1. Law, social and behavioral sciences

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Published In

WINE '08: Proceedings of the 4th International Workshop on Internet and Network Economics

December 2008

731 pages

ISBN:9783540921844

Editors:
Christos Papadimitriou
Computer Science Division, University of California at Berkeley, Berkeley, USA
,
Shuzhong Zhang
Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Shatin, N.T., Hong Kong,

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Springer-Verlag

Berlin, Heidelberg

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Published: 17 December 2008

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Gupta ASaha BSarkar U(2016)Systemic Concentration in Sponsored Search MarketsACM Transactions on Management Information Systems10.1145/29346957:2(1-26)Online publication date: 16-Aug-2016
https://dl.acm.org/doi/10.1145/2934695
Devanur NHuang ZPsomas CWichs DMansour Y(2016)The sample complexity of auctions with side informationProceedings of the forty-eighth annual ACM symposium on Theory of Computing10.1145/2897518.2897553(426-439)Online publication date: 19-Jun-2016
https://dl.acm.org/doi/10.1145/2897518.2897553
Yuan SWang JChen BMason PSeljan SMacskassy SPerlich CLeskovec JWang WGhani R(2014)An empirical study of reserve price optimisation in real-time biddingProceedings of the 20th ACM SIGKDD international conference on Knowledge discovery and data mining10.1145/2623330.2623357(1897-1906)Online publication date: 24-Aug-2014
https://dl.acm.org/doi/10.1145/2623330.2623357

Abstract

References

Cited By

Recommendations

Mixed-bundling auctions with reserve prices

Incentive-Compatible Learning of Reserve Prices for Repeated Auctions

Common value auctions with buy prices

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