Abstract
We analyze symmetric pure strategy equilibria in dynamic sponsored search auction games using simulations by restricting the strategies to several in a class introduced by Cary et al. [1]. We show that a particular convergent strategy also exhibits high stability to deviations. On the other hand, a strategy which yields high payoffs to all players is not sustainable in equilibrium play. Additionally, we analyze a repeated game in which each stage is a static complete-information sponsored search game. In this setting, we demonstrate a collusion strategy which yields high payoffs to all players and empirically show it to be sustainable over a range of settings.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Cary, M., Das, A., Edelman, B., Giotis, I., Heimerl, K., Karlin, A.R., Mathieu, C., Schwarz, M.: Greedy bidding strategies for keyword auctions. In: Eighth ACM Conference on Electronic Commerce (2007)
Edelman, B., Ostrovsky, M., Schwarz, M.: Internet advertising and the generalized second price auction: Selling billions of dollars worth of keywords. American Economic Review 9(1), 242–259 (2007)
Feng, J., Zhang, X.: Dynamic price competition on the internet: advertising auctions. In: Eighth ACM Conference on Electronic Commerce, pp. 57–58 (2007)
Krishna, V.: Auction Theory, 1st edn. Academic Press, San Diego (2002)
Lahaie, S.: An analysis of alternative slot auction designs for sponsored search. In: Seventh ACM Conference on Electronic Commerce (2006)
Lahaie, S., Pennock, D.M.: Revenue analysis of a family of ranking rules for keyword auctions. In: Eighth ACM Conference on Electronic Commerce (2007)
Liang, L., Qi, Q.: Cooperative or vindictive: bidding strategies in sponsored search auctions. In: Third International Workshop on Internet and Network Economics. LNCS, Springer, Heidelberg (2007)
Mas-Colell, A., Whinston, M.D., Green, J.R.: Microeconomic Theory. Oxford University Press, Oxford (1995)
Varian, H.: Position auctions. International Journal of Industrial Organization ( to appear)
Author information
Authors and Affiliations
Editor information
Rights and permissions
Copyright information
© 2007 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Vorobeychik, Y., Reeves, D.M. (2007). Equilibrium Analysis of Dynamic Bidding in Sponsored Search Auctions. In: Deng, X., Graham, F.C. (eds) Internet and Network Economics. WINE 2007. Lecture Notes in Computer Science, vol 4858. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-77105-0_17
Download citation
DOI: https://doi.org/10.1007/978-3-540-77105-0_17
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-77104-3
Online ISBN: 978-3-540-77105-0
eBook Packages: Computer ScienceComputer Science (R0)