Abstract
We consider the revenue of the Generalized Second Price (GSP) auction, which is one of the most widely used mechanisms for ad auctions. While the standard model of ad auctions implies that the revenue of GSP in equilibrium is at least as high as the revenue of VCG, the literature suggests that it is not strictly higher due to the selection of a natural equilibrium that coincides with the VCG outcome. We propose a randomized modification of the GSP mechanism, which eliminates the low-revenue equilibria of the GSP mechanism under some natural restrictions. The proposed mechanism leads to a higher revenue to the seller.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Blumrosen, L., Hartline, J.D., Nong, S.: Position auctions and non-uniform conversion rates. In: Proceedings of the 4th ACM EC Workshop on Ad Auctions (2008)
Brooks, N.: The Atlas rank report: How search engine rank impacts traffic, http://tiny.cc/wj8f3
Edelman, B., Ostrovsky, M., Schwarz, M.: Internet advertising and the generalized second price auction: Selling billions of dollars worth of keywords. American Economic Review 97(1), 242–259 (2007)
Edelman, B., Schwarz, M.: Optimal auction design and equilibrium selection in sponsored search auctions. American Economic Review 100, 597–602 (2010)
Feldman, M., Meir, R., Tennenholtz, M.: Revenue enhancement in ad auctions (2011) (manuscript), http://www.cs.huji.ac.il/~reshef24/auctions.wine11.pdf
Hartline, J.D., Yan, Q.: Envy, truth, and profit. In: EC 2011: Proceeding of the 12th ACM Conference on Electronic Commerce, pp. 243–252 (2011)
Kuminov, D., Tennenholtz, M.: User modeling in position auctions: re-considering the GSP and VCG mechanisms. In: AAMAS 2009: Proceedings of the 8th International Joint Conference on Autonomous Agents and Multiagent Systems, pp. 273–280 (2009)
Lucier, B., Leme, R.P., Tardos, É.: On revenue in the generalized second price auction. In: Proceedings of the 7th ACM EC Workshop on Ad Auctions (2011)
Monderer, D., Tennenholtz, M.: K-price auctions: revenue inequalities, utility equivalence, and competition in auction design. Economic Theory 24(2), 255–270 (2002)
Ostrovsky, M., Schwarz, M.: Reserve prices in internet advertising auctions: A field experiment. In: EC 2011: Proceedings of the 12th ACM Conference on Electronic Commerce, pp. 59–60 (2011)
Thompson, D.R.M., Leyton-Brown, K.: Computational analysis of perfect-information position auctions. In: EC 2009: Proceedings of the 10th ACM Conference on Electronic Commerce, pp. 51–60 (2009)
Varian, H.R.: Position auctions. International Journal of Industrial Organization 25(6), 1163–1178 (2007)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2011 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Feldman, M., Meir, R., Tennenholtz, M. (2011). Revenue Enhancement in Ad Auctions. In: Chen, N., Elkind, E., Koutsoupias, E. (eds) Internet and Network Economics. WINE 2011. Lecture Notes in Computer Science, vol 7090. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-25510-6_34
Download citation
DOI: https://doi.org/10.1007/978-3-642-25510-6_34
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-25509-0
Online ISBN: 978-3-642-25510-6
eBook Packages: Computer ScienceComputer Science (R0)