Börgers, Tilman and Cox, Ingemar and Pesendorfer, Martin and Petricek, Vaclav (2008): Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence.
Download (281kB) | Preview
This paper presents a game theoretic analysis of the generalized second price auc- tion that the company Overture operated in 2004 to sell sponsored search listings on its search engine. We present results that indicate that this auction has a multi- plicity of Nash equilibria. We also show that weak dominance arguments do not in general select a unique Nash equilibrium. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer some preliminary conclu- sions about advertisers’ true willingness to bid for sponsored search listings. We find that advertisers’ true willingness to bid is multi-dimensional and decreasing in listing position.
|Item Type:||MPRA Paper|
|Original Title:||Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence|
|Keywords:||auctions, sponsored search.|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D44 - Auctions|
|Depositing User:||Tilman Börgers|
|Date Deposited:||03. Mar 2011 02:23|
|Last Modified:||19. Feb 2013 06:51|
Athey, Susan and Glenn Ellison. 2008. "Position Auctions with Consumer Search." http://kuznets.harvard.edu/~athey/position.pdf.
Blume, Andreas and Paul Heidhues. 2004. "All Equilibria of the Vickrey Auction." Journal of Economic Theory, 114(1): 170-177.
Edelman, Benjamin and Michael Ostrovsky. 2007. "Strategic Bidder Behavior in Sponsored Search Auctions." Decision Support Systems, 43(1): 192-198.
Edelman, Benjamin, Michael Ostrovsky and Michael Schwarz. 2007. "Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords." American Economic Review, 97(1): 242-259.
Jehiel, Phililppe and Benny Moldovanu. 2006. "Allocative and Informational Externalities in Auctions and Related Mechanisms," In The Proceedings of the 9th World Congress of the Econometric Society, ed. Richard Blundell, Whhitney Newey, and Torsten Persson, 102-135. Cambridge: Cambridge University Press.
Lahaie, Sebastien. 2006. "An Analysis of Alternative Slot Auction Designs for Sponsored Search." In Proceedings of the 7th ACM Conference on Electronic Commerce, ed. John Feigenbaum, John Chuang and David Pennock, 218-227. Ann Arbor: Association for Computing Machinery.
Milgrom, Paul. 2000. "Putting Auction Theory to Work." Journal of Political Economy, 108(2): 245-272.
Moldovanu, Benny and Aner Sela. "The Optimal Allocation of Prizes in Contests." American Economic Review, 91(3): 542-558.
Moldovanu, Benny, Aner Sela and Xianwen Shi. 2007. "Contests for Status." Journal of Political Economy, 115(2): 338-363.
Varian, Hal. 2007. "Position Auctions," International Journal of Industrial Organization, 25(6): 1163-1178.