Equilibrium bidding strategy for GSP keyword auctions

Linjing Li, Daniel Zeng, Feiyue Wang

Research output: Contribution to conferencePaperpeer-review

5 Scopus citations


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)
Number of pages6
StatePublished - 2009
Event19th Workshop on Information Technologies and Systems, WITS 2009 - Phoenix, AZ, United States
Duration: Dec 14 2009Dec 15 2009


Other19th Workshop on Information Technologies and Systems, WITS 2009
Country/TerritoryUnited States
CityPhoenix, AZ


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

ASJC Scopus subject areas

  • Information Systems
  • Control and Systems Engineering


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