Dynamic Cost-Per-Action Mechanisms and Applications to Online Advertising
AbstractWe examine the problem of allocating a resource repeatedly over time amongst a set of agents. The utility that each agent derives from consumption of the item is private information to that agent and, prior to consumption may be unknown to that agent. The problem is motivated by keyword auctions, where the resource to be allocated is a slot on a search page. We describe a mechanism based on a sampling-based learning algorithm that under suitable assumptions is asymptotically individually rational, asymptotically Bayesian incentive compatible and asymptotically ex-ante efficient. The mechanism can be interpreted as a cost per action keyword auction.
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Bibliographic InfoPaper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1450.
Date of creation: Jul 2007
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Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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- Susan Athey & Ilya Segal, 2007. "An Efficient Dynamic Mechanism," Levine's Bibliography 122247000000001134, UCLA Department of Economics.
- Dirk Bergemann & Juuso Valimaki, 2006.
"Efficient Dynamic Auctions,"
Cowles Foundation Discussion Papers
1584, Cowles Foundation for Research in Economics, Yale University.
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