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Choice Screen Auctions

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  • Ostrovsky, Michael

    (Stanford U)

Abstract

Choice screen auctions have been recently deployed in 31 European countries, allowing consumers to choose their preferred search engine on Google's Android platform instead of being automatically defaulted to Google's own search engine. I show that a seemingly minor detail in the design of these auctions--whether they are conducted on a "per appearance" or a "per install" basis--plays a major role in the mix and characteristics of auction winners, and, consequently, in their expected overall market share. I also show that "per install" auctions distort the incentives of alternative search engines toward extracting as much revenue as possible from each user who installs them, at the expense of lowering the expected number of such users. The distortion becomes worse as the auction gets more competitive and the number of bidders in- creases. Empirical evidence from Android choice screen auctions conducted in 2020 is consistent with my theoretical results.

Suggested Citation

  • Ostrovsky, Michael, 2020. "Choice Screen Auctions," Research Papers 3912, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:3912
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    File URL: https://www.gsb.stanford.edu/gsb-cmis/gsb-cmis-download-auth/501302
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    Cited by:

    1. Decarolis, Francesco & Li, Muxin, 2023. "Regulating online search in the EU: From the android case to the digital markets act and digital services act," International Journal of Industrial Organization, Elsevier, vol. 90(C).
    2. John Kwoka & Tommaso Valletti, 2021. "Unscrambling the eggs: breaking up consummated mergers and dominant firms [Too much data: prices and inefficiencies in data markets]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(5), pages 1286-1306.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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