2,405 research outputs found
Optimising Trade-offs Among Stakeholders in Ad Auctions
We examine trade-offs among stakeholders in ad auctions. Our metrics are the
revenue for the utility of the auctioneer, the number of clicks for the utility
of the users and the welfare for the utility of the advertisers. We show how to
optimize linear combinations of the stakeholder utilities, showing that these
can be tackled through a GSP auction with a per-click reserve price. We then
examine constrained optimization of stakeholder utilities.
We use simulations and analysis of real-world sponsored search auction data
to demonstrate the feasible trade-offs, examining the effect of changing the
allowed number of ads on the utilities of the stakeholders. We investigate both
short term effects, when the players do not have the time to modify their
behavior, and long term equilibrium conditions.
Finally, we examine a combinatorially richer constrained optimization
problem, where there are several possible allowed configurations (templates) of
ad formats. This model captures richer ad formats, which allow using the
available screen real estate in various ways. We show that two natural
generalizations of the GSP auction rules to this domain are poorly behaved,
resulting in not having a symmetric Nash equilibrium or having one with poor
welfare. We also provide positive results for restricted cases.Comment: 18 pages, 10 figures, ACM Conference on Economics and Computation
201
Generalized Second Price Auction with Probabilistic Broad Match
Generalized Second Price (GSP) auctions are widely used by search engines
today to sell their ad slots. Most search engines have supported broad match
between queries and bid keywords when executing GSP auctions, however, it has
been revealed that GSP auction with the standard broad-match mechanism they are
currently using (denoted as SBM-GSP) has several theoretical drawbacks (e.g.,
its theoretical properties are known only for the single-slot case and
full-information setting, and even in this simple setting, the corresponding
worst-case social welfare can be rather bad). To address this issue, we propose
a novel broad-match mechanism, which we call the Probabilistic Broad-Match
(PBM) mechanism. Different from SBM that puts together the ads bidding on all
the keywords matched to a given query for the GSP auction, the GSP with PBM
(denoted as PBM-GSP) randomly samples a keyword according to a predefined
probability distribution and only runs the GSP auction for the ads bidding on
this sampled keyword. We perform a comprehensive study on the theoretical
properties of the PBM-GSP. Specifically, we study its social welfare in the
worst equilibrium, in both full-information and Bayesian settings. The results
show that PBM-GSP can generate larger welfare than SBM-GSP under mild
conditions. Furthermore, we also study the revenue guarantee for PBM-GSP in
Bayesian setting. To the best of our knowledge, this is the first work on
broad-match mechanisms for GSP that goes beyond the single-slot case and the
full-information setting
Voluntary Commitments Lead to Efficiency
Consider an agent (manager,artist, etc.) who has imperfect private information about his productivity. At the beginning of his career (period 1, âshort runâ), the agent chooses among publicly observable actions that generate imperfect signals of his productivity. The actions can be ranked according to the informativeness of the signals they generate. The market observes the agentâs action and the signal generated by it, and pays a wage equal to his expected productivity. In period 2 (the âlong runâ), the agent chooses between a constant payoff and a wage proportional to his true productivity, and the game ends. We show that in any equilibrium where not all types of the agent choose the same action, the average productivity of an agent choosing a less informative action is greater. However, the types choosing that action are not uniformly higher. In particular, we derive conditions for the existence of a tripartite equilibrium where low and high types pool on a less informative action while medium (on average, lower) types choose to send a more informative signal.signalling, career concerns
On the informational content of wage offers
This article investigates signaling and screening roles of wage offers in a single-play matching model with two-sided unobservable characteristics. It generates the following predictions as matching equilibrium outcomes: (i) âgoodâ jobs offer premia if âhigh-qualityâ worker population is large; (ii) âbadâ jobs pay compensating differentials if the proportion of âgoodâ jobs to âlow-qualityâ workers is large; (iii) all firms may offer a pooling wage in markets dominated by âhigh-qualityâ workers and firms; or (iv) Greshamâs Law prevails: âgoodâ types withdraw if âbadâ types dominate the population. The screening/signaling motive thus has the potential of explaining a variety of wage patterns
The Economics of Internet Markets
The internet has facilitated the creation of new markets characterized by large scale, increased customization, rapid innovation and the collection and use of detailed consumer and market data. I describe these changes and some of the economic theory that has been useful for thinking about online advertising markets, retail and business-to-business e-commerce, internet job matching and financial exchanges, and other internet platforms. I also discuss the empirical evidence on competition and consumer behavior in internet markets and some directions for future research.internet, market, innovation, advertising, retail, e-commerce, financial exchanges
Political Equilibrium with Private or/and Public Campaign Finance: A Comparison of Institutions
We propose a theory of party competition (two parties, single-issue) where citizens acquire party membership by contributing money to a party, and where a memberâs influence on the policy taken by her party is proportional to her campaign contribution. The polity consists of informed and uninformed voters: only informed voters join parties, and the party campaign chest, the sum of its received contributions, is used to advertise and reach uninformed voters. Parties compete with each other strategically with respect to policy choice and advertising. We propose a deïŹnition of political equilibrium, in which party membership, citizen contributions, and partiesâ policies are simultaneously determined, for each of four ïŹnancing institutions, running a gamut between a purely private, unconstrained system, to a public system in which all citizens have equal ïŹnancial input. We compare the representation and welfare properties of these four institutions
On Revenue Maximization with Sharp Multi-Unit Demands
We consider markets consisting of a set of indivisible items, and buyers that
have {\em sharp} multi-unit demand. This means that each buyer wants a
specific number of items; a bundle of size less than has no value,
while a bundle of size greater than is worth no more than the most valued
items (valuations being additive). We consider the objective of setting
prices and allocations in order to maximize the total revenue of the market
maker. The pricing problem with sharp multi-unit demand buyers has a number of
properties that the unit-demand model does not possess, and is an important
question in algorithmic pricing. We consider the problem of computing a revenue
maximizing solution for two solution concepts: competitive equilibrium and
envy-free pricing.
For unrestricted valuations, these problems are NP-complete; we focus on a
realistic special case of "correlated values" where each buyer has a
valuation v_i\qual_j for item , where and \qual_j are positive
quantities associated with buyer and item respectively. We present a
polynomial time algorithm to solve the revenue-maximizing competitive
equilibrium problem. For envy-free pricing, if the demand of each buyer is
bounded by a constant, a revenue maximizing solution can be found efficiently;
the general demand case is shown to be NP-hard.Comment: page2
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