research-article

Convergence of Position Auctions under Myopic Best-Response Dynamics

Authors:

Benjamin Edelman,

Ioannis Giotis,

Kurtis Heimerl,

Anna R. Karlin,

Scott Duke Kominers,

Claire Mathieu, and

Michael SchwarzAuthors Info & Claims

ACM Transactions on Economics and Computation (TEAC), Volume 2, Issue 3

Article No.: 9, Pages 1 - 20

https://doi.org/10.1145/2632226

Published: 01 July 2014 Publication History

Abstract

We study the dynamics of multiround position auctions, considering both the case of exogenous click-through rates and the case in which click-through rates are determined by an endogenous consumer search process. In both contexts, we demonstrate that dynamic position auctions converge to their associated static, envy-free equilibria. Furthermore, convergence is efficient, and the entry of low-quality advertisers does not slow convergence. Because our approach predominantly relies on assumptions common in the sponsored search literature, our results suggest that dynamic position auctions converge more generally.

References

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Susan Athey and Glenn Ellison. 2011. Position auctions with consumer search. Q. J. Economics 126, 1213--1270.

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Atlas Search. 2013. Campaign tools. http://advertising.microsoft.com/atlas-search-bid-management. (Historic version, listing specific bidding strategies, is preserved by Archive.org at http://web.archive.org/web/20070312022600/http://www.atlasonepoint.com/products/bidmanager/rulesbased?)

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D. P. Bertsekas. 1988. The auction algorithm: A distributed relaxation method for the assignment problem. Annals Oper. Res. 14, 105--123.

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Tian-Ming Bu, Xiaotie Deng, and Qi Qi. 2007. Dynamics of strategic manipulation in ad-words auction. In Proceedings of the 3rd Workshop on Sponsored Search Auctions (SSA’07), in conjunction with WWW’07.

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Matthew Cary, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna R. Karlin, Claire Mathieu, and Michael Schwarz. 2007. Greedy bidding strategies for keyword auctions. In Proceedings of the 8th ACM Conference on Electronic Commerce. ACM, 262--271.

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Matthew Cary, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna R. Karlin, Claire Mathieu, and Michael Schwarz. 2008. On best-response bidding in GSP auctions. NBER Working Paper W13788.

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Benjamin Edelman, Michael Ostrovsky, and Michael Schwarz. 2007. Internet advertising and the generalized second-price auction: Selling billions of dollars worth of keywords. Amer. Econ. Rev. 97, 242--259.

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Benjamin Edelman and Michael Schwarz. 2010. Optimal auction design and equilibrium selection in sponsored search auctions. Amer. Econ. Rev. 100, 597--602.

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Scott Duke Kominers. 2009. Dynamic position auctions with consumer search. In Proceedings of the 5th International Conference on Algorithmic Aspects in Information and Management. Springer, 240--250.

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Sébastien Lahaie. 2006. An analysis of alternative slot auction designs for sponsored search. In Proceedings of the 7th ACM Conference on Electronic Commerce. ACM, 218--227.

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Cited By

Habiba UMaghsudi SHossain E(2024)A Repeated Auction Model for Load-Aware Dynamic Resource Allocation in Multi-Access Edge ComputingIEEE Transactions on Mobile Computing10.1109/TMC.2023.333860223:7(7801-7817)Online publication date: Jul-2024
https://doi.org/10.1109/TMC.2023.3338602
Brânzei SDevanur NRabani YBiró PChawla SEchenique F(2021)Proportional Dynamics in Exchange EconomiesProceedings of the 22nd ACM Conference on Economics and Computation10.1145/3465456.3467644(180-201)Online publication date: 18-Jul-2021
https://dl.acm.org/doi/10.1145/3465456.3467644
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Index Terms

Convergence of Position Auctions under Myopic Best-Response Dynamics
1. Applied computing
  1. Electronic commerce
  2. Law, social and behavioral sciences

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Published In

cover image ACM Transactions on Economics and Computation

ACM Transactions on Economics and Computation Volume 2, Issue 3

July 2014

71 pages

ISSN:2167-8375

EISSN:2167-8383

DOI:10.1145/2656863

Editors:
Vincent Conitzer
Duke University
,
Preston McAfee
Microsoft

Issue’s Table of Contents

Copyright © 2014 ACM.

Publication rights licensed to ACM. ACM acknowledges that this contribution was authored or co-authored by an employee, contractor or affiliate of a national government. As such, the Government retains a nonexclusive, royalty-free right to publish or reproduce this article, or to allow others to do so, for Government purposes only.

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 01 July 2014

Accepted: 01 June 2013

Revised: 01 January 2013

Received: 01 May 2010

Published in TEAC Volume 2, Issue 3

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a Yahoo! Research Alliance
European Social Fund
Education and Lifelong Learning of the National Strategic Reference Framework (NSRF)
Harvard College Program for Research in Science and Engineering
American Mathematical Society
Division of Computing and Communication Foundations

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Cited By

Habiba UMaghsudi SHossain E(2024)A Repeated Auction Model for Load-Aware Dynamic Resource Allocation in Multi-Access Edge ComputingIEEE Transactions on Mobile Computing10.1109/TMC.2023.333860223:7(7801-7817)Online publication date: Jul-2024
https://doi.org/10.1109/TMC.2023.3338602
Brânzei SDevanur NRabani YBiró PChawla SEchenique F(2021)Proportional Dynamics in Exchange EconomiesProceedings of the 22nd ACM Conference on Economics and Computation10.1145/3465456.3467644(180-201)Online publication date: 18-Jul-2021
https://dl.acm.org/doi/10.1145/3465456.3467644
Gouri Suresh SSchauder S(2020)Income Segregation and Access to Healthy FoodAmerican Journal of Preventive Medicine10.1016/j.amepre.2020.02.009Online publication date: May-2020
https://doi.org/10.1016/j.amepre.2020.02.009
Ben-Porat ORosenberg ITennenholtz (2019)Convergence of learning dynamics in information retrieval gamesProceedings of the Thirty-Third AAAI Conference on Artificial Intelligence and Thirty-First Innovative Applications of Artificial Intelligence Conference and Ninth AAAI Symposium on Educational Advances in Artificial Intelligence10.1609/aaai.v33i01.33011780(1780-1787)Online publication date: 27-Jan-2019
https://dl.acm.org/doi/10.1609/aaai.v33i01.33011780
Norman T(2019)Evolutionary stability in the generalized second-price auctionEconomic Theory10.1007/s00199-019-01240-5Online publication date: 9-Dec-2019
https://doi.org/10.1007/s00199-019-01240-5
Ben-Porat OTennenholtz M(2018)A game-theoretic approach to recommendation systems with strategic content providersProceedings of the 32nd International Conference on Neural Information Processing Systems10.5555/3326943.3327046(1118-1128)Online publication date: 3-Dec-2018
https://dl.acm.org/doi/10.5555/3326943.3327046
Hummel P(2018)Hybrid mechanisms for Vickrey–Clarke–Groves and generalized second-price bidsInternational Journal of Game Theory10.1007/s00182-017-0591-947:1(331-350)Online publication date: 1-Mar-2018
https://dl.acm.org/doi/10.1007/s00182-017-0591-9
Che YChoi SKim J(2017)An experimental study of sponsored-search auctionsGames and Economic Behavior10.1016/j.geb.2016.10.008102(20-43)Online publication date: Mar-2017
https://doi.org/10.1016/j.geb.2016.10.008
Kamijo Y(2013)Bidding behaviors for a keyword auction in a sealed-bid environmentDecision Support Systems10.5555/2747904.274824056:C(371-378)Online publication date: 1-Dec-2013
https://dl.acm.org/doi/10.5555/2747904.2748240

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