Dynamic Position Auctions with Consumer Search

Abstract

Building upon the static model of Athey and Ellison (2008), we demonstrate the efficient convergence of dynamic position auctions in the presence of consumer search. The entry of low-quality advertisers does not slow this convergence. Our methods are extensions of those introduced by Cary et al. (2008). The applicability of these methods in the presence of consumer search indicates the robustness of the approach and suggests that convergence of dynamic position auction models is demonstrable whenever the associated static equilibrium strategies are sufficiently well-behaved.

Keywords: position auctions, dynamic auctions, convergence, consumer search

JEL Classification: C62, C73, D44, L86, M37