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Pure-Strategy Equilibrium in the Generalized First-Price Auction

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  • Michael Ostrovsky
  • Andrzej Skrzypacz

Abstract

We revisit the classic result on the (non-)existence of pure-strategy Nash equilibria in the Generalized First-Price Auction for sponsored search advertising and show that the conclusion may be reversed when ads are ranked based on the product of stochastic quality scores and bid amounts, rather than solely on the bids or on the product of bids and deterministic quality scores. Moreover, the expected revenue in the pure strategy equilibrium of the Generalized First-Price Auction may substantially exceed that of the Generalized Second-Price Auction, although under some conditions the relation may also be reversed.

Suggested Citation

  • Michael Ostrovsky & Andrzej Skrzypacz, 2026. "Pure-Strategy Equilibrium in the Generalized First-Price Auction," Papers 2608.00334, arXiv.org.
    • Handle: RePEc:arx:papers:2608.00334
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    2. Thanawat Sornwanee, 2026. "Very Credible Auction," Papers 2609.14263, arXiv.org.

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