IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_10312.html
   My bibliography  Save this paper

Nonparametric Estimation of Sponsored Search Auctions and Impacts of AD Quality on Search Revenue

Author

Listed:
  • Dongwoo Kim
  • Pallavi Pal

Abstract

This paper presents an empirical model of sponsored search auctions in which advertisers are ranked by bid and ad quality. We introduce a new nonparametric estimator for the advertiser’s ad value and its distribution under the ‘incomplete information’ assumption. The ad value is characterized by a tractable analytical solution given observed auction parameters. Using Yahoo! search auction data, we estimate value distributions and study the bidding behavior across product categories. We find that advertisers shade their bids more when facing less competition. We also conduct counterfactual analysis to evaluate the impact of score squashing (ad quality raised to power θ

Suggested Citation

  • Dongwoo Kim & Pallavi Pal, 2023. "Nonparametric Estimation of Sponsored Search Auctions and Impacts of AD Quality on Search Revenue," CESifo Working Paper Series 10312, CESifo.
  • Handle: RePEc:ces:ceswps:_10312
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp10312.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    sponsored search links; generalized second price auction; incomplete information; nonparametric estimation; bid shading; score quashing;
    All these keywords.

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_10312. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.