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Comparing predicted prices in auctions for online advertising


  • Bax, Eric
  • Kuratti, Anand
  • Mcafee, Preston
  • Romero, Julian


Online publishers sell opportunities to show ads. Some advertisers pay only if their ad elicits a user response. Publishers estimate response rates for ads in order to estimate expected revenues from showing the ads. Then publishers select ads that maximize estimated expected revenue.

Suggested Citation

  • Bax, Eric & Kuratti, Anand & Mcafee, Preston & Romero, Julian, 2012. "Comparing predicted prices in auctions for online advertising," International Journal of Industrial Organization, Elsevier, vol. 30(1), pages 80-88.
  • Handle: RePEc:eee:indorg:v:30:y:2012:i:1:p:80-88 DOI: 10.1016/j.ijindorg.2011.06.001

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    References listed on IDEAS

    1. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    2. Thaler, Richard H, 1988. "Anomalies: The Winner's Curse," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 191-202, Winter.
    3. Susan Athey & Jonathan Levin, 2001. "Information and Competition in U.S. Forest Service Timber Auctions," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 375-417, April.
    4. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    5. Jorion, Philippe, 1986. "Bayes-Stein Estimation for Portfolio Analysis," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 21(03), pages 279-292, September.
    6. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, March.
    7. Hal R. Varian, 2009. "Online Ad Auctions," American Economic Review, American Economic Association, vol. 99(2), pages 430-434, May.
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    Cited by:

    1. Ragavendran Gopalakrishnan & Eric Bax & Krishna Prasad Chitrapura & Sachin Garg, 2015. "Portfolio Allocation for Sellers in Online Advertising," Papers 1506.02020,
    2. R. McAfee, 2011. "The Design of Advertising Exchanges," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 169-185, November.

    More about this item


    Reversion; Validation; Bias; Auction; Prediction;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations


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