Equilibrium bidding strategy for GSP keyword auctions

Linjing Li, Dajun Zeng, Feiyue Wang

Research output: Chapter in Book/Report/Conference proceedingConference contribution

5 Citations (Scopus)

Abstract

The generalized second-price (GSP) mechanism is the most widely-used auction format in sponsored search markets. However, figuring out how to bid on GSP auctions presents major theoretical and computational challenges due to the complex nature of the auction format and the infinite number of equilibria. Our study characterizes various equilibrium bidding behaviors in GSP auctions. We develop an algorithm to identify all pure-strategy Nash equilibria and discuss their distribution in the pure-strategy space. This equilibrium distribution can help advertisers formulate bidding strategies, and help search engines calculate their expected revenues.

Original languageEnglish (US)
Title of host publication19th Workshop on Information Technologies and Systems, WITS 2009
PublisherSocial Science Research Network
Pages109-114
Number of pages6
StatePublished - 2009
Event19th Workshop on Information Technologies and Systems, WITS 2009 - Phoenix, AZ, United States
Duration: Dec 14 2009Dec 15 2009

Other

Other19th Workshop on Information Technologies and Systems, WITS 2009
CountryUnited States
CityPhoenix, AZ
Period12/14/0912/15/09

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Keywords

  • Equivalence relation
  • Generalized second-price
  • Keyword auctions
  • Nash equilibrium

ASJC Scopus subject areas

  • Information Systems
  • Control and Systems Engineering

Cite this

Li, L., Zeng, D., & Wang, F. (2009). Equilibrium bidding strategy for GSP keyword auctions. In 19th Workshop on Information Technologies and Systems, WITS 2009 (pp. 109-114). Social Science Research Network.

Equilibrium bidding strategy for GSP keyword auctions. / Li, Linjing; Zeng, Dajun; Wang, Feiyue.

19th Workshop on Information Technologies and Systems, WITS 2009. Social Science Research Network, 2009. p. 109-114.

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Li, L, Zeng, D & Wang, F 2009, Equilibrium bidding strategy for GSP keyword auctions. in 19th Workshop on Information Technologies and Systems, WITS 2009. Social Science Research Network, pp. 109-114, 19th Workshop on Information Technologies and Systems, WITS 2009, Phoenix, AZ, United States, 12/14/09.
Li L, Zeng D, Wang F. Equilibrium bidding strategy for GSP keyword auctions. In 19th Workshop on Information Technologies and Systems, WITS 2009. Social Science Research Network. 2009. p. 109-114
Li, Linjing ; Zeng, Dajun ; Wang, Feiyue. / Equilibrium bidding strategy for GSP keyword auctions. 19th Workshop on Information Technologies and Systems, WITS 2009. Social Science Research Network, 2009. pp. 109-114
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