Problem Definition
The model studied here is the same as that which was first presented in [11] by Varian. For some keyword, \( { \mathcal{N} = \{ 1,2,\dots,N \} } \), advertisers bid \( { \mathcal{K} = \{ 1,2,\dots,K \} } \) advertisement slots (\( { K < N } \)) which will be displayed on the search result page from top to bottom. The higher the advertisement is positioned, the more conspicuous it is and the more clicks it receives. Thus for any two slots \( { k_1, k_2 \in \mathcal{K} } \), if \( { k_1 < k_2 } \), then slot k 1's click-through rate (CTR) \( { c_{k_1} } \) is larger than \( { c_{k_2} } \). That is, \( { c_1 > c_2 > \dots > c_K } \), from top to bottom, respectively. Moreover, each bidder \( { i \in \mathcal{N} } \) has privately known information, v i, which represents the expected return per click to bidder i .
According to each bidder i's submitted bid b i, the auctioneer then decides how to distribute the advertisement slots among the bidders and how much they...
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Bu, TM. (2008). Adwords Pricing. In: Kao, MY. (eds) Encyclopedia of Algorithms. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-30162-4_5
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