Marketing Agencies and Collusive Bidding in Online Ad Auctions

The transition of the advertising market from traditional media to the internet has induced a proliferation of marketing agencies specialized in bidding in the auctions that are used to sell ad space on the web. We analyze how collusive bidding can emerge from bid delegation to a common marketing agency and how this can undermine the revenues and allocative efficiency of both the generalized second-price auction (GSP, used by Google, Microsoft Bing, and Yahoo!) and the Vickrey–Clarke–Groves (VCG) mechanism (used by Facebook). We find that despite its well-known susceptibility to collusion, the VCG mechanism outperforms the GSP auction in terms of both revenues and efficiency. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

Efficient Path Planning and Truthful Incentive Mechanism Design for Mobile Crowdsensing

Mobile crowdsensing (MCS) is a promising paradigm for large-scale sensing. A group of users are recruited as workers to accomplish various sensing tasks and provide data to the platform and requesters. A key problem in MCS is to design the incentive mechanism, which can attract enough workers to participate in sensing activities and maintain the truthfulness. As the main advantage of MCS, user mobility is a factor that must be considered. We make an attempt to build a technical framework for MCS, which is associated with a truthful incentive mechanism taking the movements of numerous workers into account. Our proposed framework contains two challenging problems: path planning and incentive mechanism design. In the path planning problem, every worker independently plans a tour to carry out the posted tasks according to its own strategy. A heuristic algorithm is proposed for the path planning problem, which is compared with two baseline algorithms and the optimal solution. In the incentive mechanism design, the platform develops a truthful mechanism to select the winners and determine their payments. The proposed mechanism is proved to be computationally efficient, individually rational, and truthful. In order to evaluate the performance of our proposed mechanism, the well-known Vickrey–Clarke–Groves (VCG) mechanism is considered as a baseline. Simulations are conducted to evaluate the performance of our proposed framework. The results show that the proposed heuristic algorithm for the path planning problem outperforms the baseline algorithms and approaches the optimal solution. Meanwhile, the proposed mechanism holds a smaller total payment compared with the VCG mechanism when both mechanisms achieve the same performance. Finally, the utility of a selected winner shows the truthfulness of proposed mechanism by changing its bid.

Combinatorial Cost Sharing

We introduce a combinatorial variant of the cost sharing problem: several services can be provided to each player and each player values every combination of services differently. A publicly known cost function specifies the cost of providing every possible combination of services. A combinatorial cost sharing mechanism is a protocol that decides which services each player gets and at what price. We look for dominant strategy mechanisms that are (economically) efficient and cover the cost, ideally without overcharging (i.e., budget balanced). Note that unlike the standard cost sharing setting, combinatorial cost sharing is a multi-parameter domain. This makes designing dominant strategy mechanisms with good guarantees a challenging task. We present the Potential Mechanism -- a combination of the VCG mechanism and a well-known tool from the theory of cooperative games: Hart and Mas-Colell's potential function. The potential mechanism is a dominant strategy mechanism that always covers the incurred cost. When the cost function is subadditive the same mechanism is also approximately efficient. Our main technical contribution shows that when the cost function is submodular the potential mechanism is approximately budget balanced in three settings: supermodular valuations, symmetric cost function and general symmetric valuations, and two players with general valuations.