Bayes-Nash Equilibria of the Generalized Second Price Auction

Author(s):  
Renato D. Gomes ◽  
Kane S. Sweeney
2013 ◽  
Vol 5 (4) ◽  
pp. 163-187 ◽  
Author(s):  
Tilman Börgers ◽  
Ingemar Cox ◽  
Martin Pesendorfer ◽  
Vaclav Petricek

This paper presents a game theoretic analysis of the generalized second-price auction that the company Overture operated in 2004 to sell sponsored search listings on search engines. We construct a model that embodies few prior assumptions about parameters, and we present results that indicate that this model has under quite general assumptions a multiplicity of Nash equilibria. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer preliminary conclusions about advertisers' true willingness to bid for sponsored search listings. We find that advertisers' true willingness to bid is multi-dimensional and decreasing in listing position. (JEL D44, L86, M31, M37)


2013 ◽  
Vol 1 (2) ◽  
pp. 1-15 ◽  
Author(s):  
Satoshi Takahashi ◽  
Tokuro Matsuo ◽  
Roger Y. Lee

A structure of the Internet advertisement is that the service providers decide order of placement of many advertisements and advertising fees by auctions when advertisers offer their promotions. It is known that Generalized Second Price Auction (GSP) mechanism is the most efficient auction mechanism of the advertisement auction. Searching engine companies employ GSP mechanism basically. There are a lot of researches on GSP in order to analyze and clarify its feature and advantages. However, these researches assume that traded advertisements are mutually independent. That is means that each advertisement does not influence other advertisements. Also these researches do not consider a value of advertisement, which means some criterions of a name value of a company, effectiveness and an importance, that is dependently each other. This paper proposes a new advertisement auction mechanism based on GSP with considering the value of advertisement. The authors analyze the auctioneer's profit in comparison between normal GSP, normal VCG (Vickrey-Clarke-Groves Mechanism) and their proposed mechanism.


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