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- 498 creator brendan-lucier.
- 498 creator eva-tardos.
- 498 creator renato-paes-leme.
- 498 type InProceedings.
- 498 label "On Revenue in the Generalized Second Price Auction".
- 498 sameAs 498.
- 498 abstract "The Generalized Second Price (GSP) auction is the primary auction used for selling sponsored search advertisements. In this paper we consider the revenue of this auction at equilibrium. Most previous work on GSP focuses on envy-free equilibria of the full information version of this game. We consider revenue in equilibria that are not necessarily envy-free, both in the full information game and in the Bayesian (partial information) game. Note that in the Bayesian setting, envy-free equilibria may not exist. We prove that if agent values are drawn from identical distributions satisfying the regularity assumption, then the GSP auction paired with an appropriate reserve price generates a constant fraction (1/6th) of the optimal revenue. In the full-information game, we show that at any Nash equilibrium of the GSP auction obtains at least half of the revenue of the VCG mechanism excluding the payment of a single participant. This bound holds also with any reserve price, and is tight. Finally, we consider the tradeoff between maximizing revenue and social welfare. We introduce a natural convexity assumption on the click-through rates and show that it implies that the revenue-maximizing equilibrium of GSP in the full information model will necessarily be envy-free. In particular, it is always possible to maximize revenue and social welfare simultaneously when click-through rates are convex. On the other hand, without this convexity assumption, we demonstrate that revenue may be maximized at a non-envy-free equilibrium that generates a socially inefficient allocation.".
- 498 hasAuthorList authorList.
- 498 isPartOf proceedings.
- 498 keyword "Ad Auction,".
- 498 keyword "Bayesian".
- 498 keyword "Equilibrium Hierarchy".
- 498 keyword "Generalized Second Price".
- 498 keyword "Revenue".
- 498 title "On Revenue in the Generalized Second Price Auction".