research-article

GSP auctions with correlated types

Authors:

Brendan Lucier,

Renato Paes LemeAuthors Info & Claims

EC '11: Proceedings of the 12th ACM conference on Electronic commerce

Pages 71 - 80

https://doi.org/10.1145/1993574.1993587

Published: 05 June 2011 Publication History

Abstract

The Generalized Second Price (GSP) auction is the primary method by which sponsered search advertisements are sold. We study the performance of this auction in the Bayesian setting for players with correlated types. Correlation arises very naturally in the context of sponsored search auctions, especially as a result of uncertainty inherent in the behaviour of the underlying ad allocation algorithm. We demonstrate that the Bayesian Price of Anarchy of the GSP auction is bounded by $4$, even when agents have arbitrarily correlated types. Our proof highlights a connection between the GSP mechanism and the concept of smoothness in games, which may be of independent interest.

For the special case of uncorrelated (i.e. independent) agent types, we improve our bound to 2(1-1/e)^-1 ≅ 3.16, significantly improving upon previously known bounds. Using our techniques, we obtain the same bound on the performance of GSP at coarse correlated equilibria, which captures (for example) a repeated-auction setting in which agents apply regret-minimizing bidding strategies. Moreoever, our analysis is robust against the presence of irrational bidders and settings of asymmetric information, and our bounds degrade gracefully when agents apply strategies that form only an approximate equilibrium.

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Cited By

Brady CGonen RRabinovich G(2024)Deep Reinforcement Learning and Influenced GamesIEEE Access10.1109/ACCESS.2024.344387312(114086-114099)Online publication date: 2024
https://doi.org/10.1109/ACCESS.2024.3443873
Deng XLin TXiao T(2023)Private Data Manipulation in Sponsored Search AuctionsCAAI Artificial Intelligence Research10.26599/AIR.2023.9150024(9150024)Online publication date: Dec-2023
https://doi.org/10.26599/AIR.2023.9150024
Chen QWang XJiang ZWu YLi HCui LSun X(2023)Breaking the traditional: a survey of algorithmic mechanism design applied to economic and complex environmentsNeural Computing and Applications10.1007/s00521-023-08647-135:22(16193-16222)Online publication date: 20-May-2023
https://doi.org/10.1007/s00521-023-08647-1
Show More Cited By

Index Terms

GSP auctions with correlated types
1. Theory of computation
  1. Design and analysis of algorithms

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Published In

cover image ACM Conferences

EC '11: Proceedings of the 12th ACM conference on Electronic commerce

June 2011

384 pages

ISBN:9781450302616

DOI:10.1145/1993574

General Chair:
Yoav Shoham
Stanford University, USA
,
Program Chairs:
Yan Chen
University of Michigan, USA
,
Tim Roughgarden
Stanford University, USA

Copyright © 2011 ACM.

Permission to make digital or hard copies of all or part of this work for personal or classroom use is granted without fee provided that copies are not made or distributed for profit or commercial advantage and that copies bear this notice and the full citation on the first page. Copyrights for components of this work owned by others than ACM must be honored. Abstracting with credit is permitted. To copy otherwise, or republish, to post on servers or to redistribute to lists, requires prior specific permission and/or a fee. Request permissions from [email protected]

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SIGecom: Special Interest Group on Economics and Computation

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Association for Computing Machinery

New York, NY, United States

Publication History

Published: 05 June 2011

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EC '11

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EC '11: ACM Conference on Electronic Commerce

June 5 - 9, 2011

California, San Jose, USA

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Overall Acceptance Rate 664 of 2,389 submissions, 28%

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Citations

Cited By

Brady CGonen RRabinovich G(2024)Deep Reinforcement Learning and Influenced GamesIEEE Access10.1109/ACCESS.2024.344387312(114086-114099)Online publication date: 2024
https://doi.org/10.1109/ACCESS.2024.3443873
Deng XLin TXiao T(2023)Private Data Manipulation in Sponsored Search AuctionsCAAI Artificial Intelligence Research10.26599/AIR.2023.9150024(9150024)Online publication date: Dec-2023
https://doi.org/10.26599/AIR.2023.9150024
Chen QWang XJiang ZWu YLi HCui LSun X(2023)Breaking the traditional: a survey of algorithmic mechanism design applied to economic and complex environmentsNeural Computing and Applications10.1007/s00521-023-08647-135:22(16193-16222)Online publication date: 20-May-2023
https://doi.org/10.1007/s00521-023-08647-1
Aggarwal GBhawalkar KMehta AMohan DPsomas AKoyejo SMohamed SAgarwal ABelgrave DCho KOh A(2022)Simple mechanisms for welfare maximization in rich advertising auctionsProceedings of the 36th International Conference on Neural Information Processing Systems10.5555/3600270.3602320(28280-28292)Online publication date: 28-Nov-2022
https://dl.acm.org/doi/10.5555/3600270.3602320
Elzayn HColini Baldeschi RLan BSchrijvers O(2022)Equilibria in Auctions with Ad TypesProceedings of the ACM Web Conference 202210.1145/3485447.3512052(68-78)Online publication date: 25-Apr-2022
https://dl.acm.org/doi/10.1145/3485447.3512052
Ezra TFeldman MRoughgarden TSuksompong W(2020)Pricing Multi-Unit MarketsACM Transactions on Economics and Computation10.1145/33737157:4(1-29)Online publication date: 30-Jan-2020
https://dl.acm.org/doi/10.1145/3373715
Colini-Baldeschi RLeonardi SSchrijvers OSodomka E(2020)Envy, Regret, and Social Welfare LossProceedings of The Web Conference 202010.1145/3366423.3380057(2913-2919)Online publication date: 20-Apr-2020
https://dl.acm.org/doi/10.1145/3366423.3380057
Deng XLin TXiao T(2020)Private Data Manipulation in Optimal Sponsored Search AuctionProceedings of The Web Conference 202010.1145/3366423.3380023(2676-2682)Online publication date: 20-Apr-2020
https://dl.acm.org/doi/10.1145/3366423.3380023
Hoeksma RUetz M(2019)The price of anarchy for utilitarian scheduling games on related machinesDiscrete Optimization10.1016/j.disopt.2018.08.00131:C(29-39)Online publication date: 1-Feb-2019
https://dl.acm.org/doi/10.1016/j.disopt.2018.08.001
Tian FQin TLiu T(2018)Computational pricing in Internet eraFrontiers of Computer Science: Selected Publications from Chinese Universities10.1007/s11704-017-6005-012:1(40-54)Online publication date: 1-Feb-2018
https://dl.acm.org/doi/10.1007/s11704-017-6005-0
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