Hybrid mechanisms for Vickrey–Clarke–Groves and generalized second-price bids

Hybrid mechanisms for Vickrey–Clarke–Groves and generalized second-price bids This paper analyzes mechanisms for selling advertising opportunities for several different positions on a page that would enable some advertisers to bid using Vickrey–Clarke–Groves (VCG) pricing while other advertisers bid using generalized second-price (GSP) pricing. I focus on a setting in which the number of ads displayed may vary with the advertisers’ bids and showing fewer ads enables the remaining ads to obtain more clicks. I illustrate the types of mechanisms one can construct that would ensure that VCG bidders have an incentive to bid truthfully, GSP bidders cannot obtain the same number of clicks at a lower price by varying their bid, and if all bidders bid using VCG (GSP) pricing, then the outcome is the same as it would be under the VCG (GSP) mechanism. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Game Theory Springer Journals

Hybrid mechanisms for Vickrey–Clarke–Groves and generalized second-price bids

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Publisher
Springer Berlin Heidelberg
Copyright
Copyright © 2017 by Springer-Verlag GmbH Germany
Subject
Economics; Economic Theory/Quantitative Economics/Mathematical Methods; Game Theory, Economics, Social and Behav. Sciences; Behavioral/Experimental Economics; Operations Research/Decision Theory
ISSN
0020-7276
eISSN
1432-1270
D.O.I.
10.1007/s00182-017-0591-9
Publisher site
See Article on Publisher Site

Abstract

This paper analyzes mechanisms for selling advertising opportunities for several different positions on a page that would enable some advertisers to bid using Vickrey–Clarke–Groves (VCG) pricing while other advertisers bid using generalized second-price (GSP) pricing. I focus on a setting in which the number of ads displayed may vary with the advertisers’ bids and showing fewer ads enables the remaining ads to obtain more clicks. I illustrate the types of mechanisms one can construct that would ensure that VCG bidders have an incentive to bid truthfully, GSP bidders cannot obtain the same number of clicks at a lower price by varying their bid, and if all bidders bid using VCG (GSP) pricing, then the outcome is the same as it would be under the VCG (GSP) mechanism.

Journal

International Journal of Game TheorySpringer Journals

Published: Sep 12, 2017

References

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