Can Credit Increase Revenue?
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Classical models of private value auctions assume that bidders know their own private value for the item being auctioned. We explore games where players have a private value, but can only learn this value through experimentation, a scenario that is typical in AdAuctions. We consider this question in a repeated game context, where early participation in the auction can help the bidders learn their own value. We consider what is a good bidding strategy for a player in this game, and show that with low enough competition new bidders will enter and experiment, but with a bit higher level of competition, initial credit offered by the platform can encourage experimentation, and hence ultimately can increase revenue.
Keywordsauction learning revenue
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