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Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords Author info | Abstract | Publisher info | Download info | Related research | Statistics Benjamin Edelman
Michael Ostrovsky
Michael Schwarz
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We investigate the "generalized second-price" (GSP) auction, a new mechanism used by search engines to sell online advertising. Although GSP looks similar to the Vickrey-Clarke-Groves (VCG) mechanism, its properties are very different. Unlike the VCG mechanism, GSP generally does not have an equilibrium in dominant strategies, and truth-telling is not an equilibrium of GSP. To analyze the properties of GSP, we describe the generalized English auction that corresponds to GSP and show that it has a unique equilibrium. This is an ex post equilibrium, with the same payoffs to all players as the dominant strategy equilibrium of VCG. (JEL D44, L81, M37)
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Article provided by American Economic Association in its journal American Economic Review .
Volume (Year): 97 (2007)
Issue (Month): 1 (March)
Pages: 242-259
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Handle: RePEc:aea:aecrev:v:97:y:2007:i:1:p:242-259Contact details of provider: Email: Web page: http://www.aeaweb.org/aer/ More information through EDIRC
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2006.
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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MPRA Paper
12554, University Library of Munich, Germany.
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Dirk Bergemann & Juuso Välimäki, 2008.
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Levine's Bibliography
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Other versions: Matthew Cary & Aparna Das & Benjamin Edelman & Ioannis Giotis & Kurtis Heimerl & Anna R. Karlin & Claire Mathieu & Michael Schwarz, 2008.
"On Best-Response Bidding in GSP Auctions ,"
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Paul Milgrom, 2007.
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Levine's Bibliography
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Kiho Yoon, 2009.
"On the strategic use of quality scores in keyword auctions: Full extraction of advertisers' surplus ,"
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