Bidding dilemma in keyword search auctions

Chatterjee, Prabirendra ORCID: https://orcid.org/0000-0003-4639-0473 2023. Bidding dilemma in keyword search auctions. [Working Paper]. Springer.

Preview

PDF - Submitted Pre-Print Version Download (466kB) | Preview

Abstract

We model an incomplete information generalized second price auction for keyword search to analyze the optimal bidding strategies of the participating advertisers. The results also apply to a more general setting where goods are being auctioned off at multiple positions. We characterize all possible pure strategy Bayes-Nash equilibrium in a static GSP auction and show that the consideration of the click through rates ratio plays a key role in determining the equilibrium bidding strategies for the advertisers. Specifically, we find that when the click through rates ratio exceeds a critical value, there will be no pure strategy Bayes-Nash equilibrium. The results from dynamic GSP auction confirm that the existence of both separating strategy and pooling strategy equilibrium also depend on critical values of click through rates ratio such that the dominant bidding strategies in standard dynamic auction become irrelevant in dynamic GSP auctions. Lastly, we find that when search engines do not publish the bidding history (i.e. there is 'minimum disclosure of information'), the advertisers will never try to mimic each other or in other words, there will be no pooling strategy equilibrium.

Item Type:	Monograph (Working Paper)
Status:	Unpublished
Schools:	Business (Including Economics)
Publisher:	Springer
Last Modified:	02 Sep 2023 01:30
URI:	https://orca.cardiff.ac.uk/id/eprint/156346

Actions (repository staff only)

Edit Item