A Dynamic Model of Sponsored Search Advertising

Sponsored search advertising is ascendant Jupiter Research reports expenditures rose 28% in 2007 to $8.9B and will continue to rise at a 15landscape. Yet little, if any empirical research focuses upon search engine marketing strategy by integrating the behavior of various agents in sponsored search advertising (i.e., searchers, advertisers, and the search engine platform). The dynamic structural model we propose serves as a foundation to explore these and other sponsored search advertising phenomena. Fitting the model to a proprietary data set provided by an anonymous search engine, we conduct several policy simulations to illustrate the bene ts of our approach. First, we explore how information asymmetries between search engines and advertisers can be exploited to enhance platform revenues. This has consequences for the pricing of market intelligence. Second, we assess the effect of allowing advertisers to bid not only on key words, but also by consumers searching histories and demographics thereby creating a more targeted model of advertising. Third, we explore several different auction pricing mechanisms and assess the role of each on engine and advertiser profits and revenues. Finally, we consider the role of consumer search tools such as sorting on consumer and advertiser behavior and engine revenues. One key finding is that the estimated advertiser value for a click on its sponsored link averages about 24 cents. Given the typical$22 retail price of the software products advertised on the considered search engine, this implies a conversion rate (sales per click) of about 1.1%, well within common estimates of 1-2% (gamedaily.com). Hence our approach appears to yield valid estimates of advertiser click valuations. Another finding is that customers appear to be segmented by their clicking frequency, with frequent clickers placing a greater emphasis on the position of the sponsored advertising link. Estimation of the policy simulations is in progress

Who Benefits from Online Privacy?

When firms can identify their past customers, they may use information about purchase histories in order to price discriminate. We present a model with a monopolist and a continuum of heterogeneous consumers, where consumers can opt out from being identified, possibly at a cost. We find that when consumers can costlessly opt out, they all individually choose privacy, which results in the highest profit for the monopolist. In fact, all consumers are better off when opting out is costly. When valuations are uniformly distributed, social surplus is non-monotonic in the cost of opting out and is highest when opting out is prohibitively costly. We introduce the notion of a privacy gatekeeper — a third party that is able to act as a privacy conduit and set the cost of opting out. We prove that the privacy gatekeeper only charges the firm in equilibrium, making privacy costless to consumers

500 Tips for Open and Online Learning

Review of 500 Tips for Open and Online Learning Phil Race London: RoutledgeFalmer, 2nd revised edition, 2005, 188pp. ISBN-13: 978-0415342773 (pbk

Who Benefits from Online Privacy?

When firms can identify their past customers, they may use information about purchase histories in order to price discriminate. We present a model with a monopolist and a continuum of heterogeneous consumers, where consumers can opt out from being identified, possibly at a cost. We find that when consumers can costlessly opt out, they all individually choose privacy, which results in the highest profit for the monopolist. In fact, all consumers are better off when opting out is costly. When valuations are uniformly distributed, social surplus is non-monotonic in the cost of opting out and is highest when opting out is prohibitively costly. We introduce the notion of a privacy gatekeeper — a third party that is able to act as a privacy conduit and set the cost of opting out. We prove that the privacy gatekeeper only charges the firm in equilibrium, making privacy costless to consumers

INVESTING IN WORK: WILKES AS AN EMPLOYMENT LAW CASE

This Article begins by introducing the doctrine of employment at-will and its contemporary operation, and applying the doctrine to the facts in Wilkes v. Springside Nursing Home, Inc. The point of the exercise is making clear the impact of Wilkes from the standpoint of employment law. The Article next turns to scholarship examining the at-will rule as a default rule and the circumstances under which a default rule may become sticky. Against this background, the Article concludes by reexamining the holding in Wilkes along with subsequent developments in Massachusetts and other jurisdictions. These include the implications of buy-sell and comparable provisions in shareholder agreements. In the situations to which the Wilkes doctrine applies in Massachusetts and elsewhere, at-will is more likely to be a sticky default than in many other employment relationships. Several factors contribute to this conclusion, perhaps most strongly the imponderable (or un-pondered) question of how effective control over the corporation’s decision-making may shift in the future

INVESTING IN WORK: WILKES AS AN EMPLOYMENT LAW CASE

This Article begins by introducing the doctrine of employment at-will and its contemporary operation, and applying the doctrine to the facts in Wilkes v. Springside Nursing Home, Inc. The point of the exercise is making clear the impact of Wilkes from the standpoint of employment law. The Article next turns to scholarship examining the at-will rule as a default rule and the circumstances under which a default rule may become sticky. Against this background, the Article concludes by reexamining the holding in Wilkes along with subsequent developments in Massachusetts and other jurisdictions. These include the implications of buy-sell and comparable provisions in shareholder agreements. In the situations to which the Wilkes doctrine applies in Massachusetts and elsewhere, at-will is more likely to be a sticky default than in many other employment relationships. Several factors contribute to this conclusion, perhaps most strongly the imponderable (or un-pondered) question of how effective control over the corporation’s decision-making may shift in the future

High-Technology Entrepreneurship in Silicon Valley Opportunities andOpportunity Costs

The economic expansion of the late 1990s undoubtedly created many opportunities for business creation in Silicon Valley, but the opportunity cost of starting a business was also high during this period because of the exceptionally tight labor market. A new measure of entrepreneurship derived from matching monthly files from the Current Population Survey (CPS) is used to provide the first test of the hypothesis that entrepreneurship rates were high in Silicon Valley during the 'Roaring 90s.' Unlike previous measures of firm births based on large, nationally representative datasets, the new measure captures business creation at the individual-owner level, includes both employer and non-employer business starts, and focuses on only hi-tech industries. Estimates from the matched CPS data indicate that hi-tech entrepreneurship rates were lower in Silicon Valley than the rest of the United States during the period from January 1996 to February 2000. Controlling for the large concentration of immigrants and highlyeducated workforce does not change the conclusion. Examining the post-boom period, we find that entrepreneurship rates in Silicon Valley increased from the late 1990s to the early 2000s. In contrast, trends in entrepreneurship rates in the United States were constant over this period. Although Silicon Valley may be an entrepreneurial location overall, the extremely tight labor market of the late 1990s, especially in hi-tech industries, may have suppressed business creation during this period