Abstract

http://ssrn.com/abstract=1087990
 
 

References (15)



 
 

Citations (5)



 


 



On Best-Response Bidding in GSP Auctions


Matthew Cary


University of Washington

Aparna Das


Brown University

Benjamin G. Edelman


Harvard University - HBS Negotiations, Organizations and Markets Unit

Ioannis Giotis


University of Washington - College of Arts and Sciences

Kurtis Heimerl


University of Washington

Anna R. Karlin


University of Washington

Claire Kenyon Mathieu


Brown University

Michael Schwarz


Yahoo! Research Labs; National Bureau of Economic Research (NBER)

January 28, 2008

Harvard Business School NOM Working Paper No. 08-056

Abstract:     
How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model ad auctions as a dynamic game of incomplete information, so we can study the convergence and robustness properties of various strategies. In particular, we consider best-response bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bids. We focus on a strategy we call "Balanced Bidding" (BB). If all players use the BB strategy, we show that bids converge to a bid vector that obtains in a complete information static model proposed by Edelman et al. [4]. We prove that convergence occurs with probability 1, and we compute the expected time until convergence.

Number of Pages in PDF File: 19

Keywords: Keyword auctions, bidding strategies, convergence

JEL Classification: C72, D44

working papers series





Download This Paper

Date posted: January 28, 2008 ; Last revised: October 25, 2012

Suggested Citation

Cary, Matthew and Das, Aparna and Edelman, Benjamin G. and Giotis, Ioannis and Heimerl, Kurtis and Karlin, Anna R. and Kenyon Mathieu, Claire and Schwarz, Michael, On Best-Response Bidding in GSP Auctions (January 28, 2008). Harvard Business School NOM Working Paper No. 08-056. Available at SSRN: http://ssrn.com/abstract=1087990 or http://dx.doi.org/10.2139/ssrn.1087990

Contact Information

Matthew Cary
University of Washington ( email )
NE Colombia Rd.
Seattle, WA 98195
United States
Aparna Das
Brown University ( email )
Box 1860
Providence, RI 02912
United States
Benjamin G. Edelman (Contact Author)
Harvard University - HBS Negotiations, Organizations and Markets Unit ( email )
Soldiers Field
Boston, MA 02163
United States
HOME PAGE: http://people.hbs.edu/bedelman
Ioannis Giotis
University of Washington - College of Arts and Sciences ( email )
Seattle, WA
United States
Kurtis Heimerl
University of Washington ( email )
NE Colombia Rd.
Seattle, WA 98195
United States
Anna R. Karlin
University of Washington ( email )
NE Colombia Rd.
Seattle, WA 98195
United States
Claire Kenyon Mathieu
Brown University ( email )
Box 1860
Providence, RI 02912
United States
Michael Schwarz
Yahoo! Research Labs ( email )
Pasadena, CA 91103
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,258
Downloads: 132
Download Rank: 112,702
References:  15
Citations:  5

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.328 seconds