Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence
AbstractThis paper presents a game theoretic analysis of the generalized second price auc- tion that the company Overture operated in 2004 to sell sponsored search listings on its search engine. We present results that indicate that this auction has a multi- plicity of Nash equilibria. We also show that weak dominance arguments do not in general select a unique Nash equilibrium. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer some preliminary conclu- sions about advertisers’ true willingness to bid for sponsored search listings. We find that advertisers’ true willingness to bid is multi-dimensional and decreasing in listing position.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 29125.
Date of creation: Sep 2008
Date of revision:
auctions; sponsored search.;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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