Externalities among Advertisers in Sponsored Search

  • Dimitris Fotakis
  • Piotr Krysta
  • Orestis Telelis
Part of the Lecture Notes in Computer Science book series (LNCS, volume 6982)

Abstract

We introduce a novel computational model for single-keyword auctions in sponsored search, which models explicitly externalities among advertisers, an aspect that has not been fully reflected in the existing models, and is known to affect the behavior of real advertisers. Our model takes into account both positive and negative correlations between any pair of advertisers, so that the click-through rate of an ad depends on the identity, relative order and distance of other ads appearing in the advertisements list. In the proposed model we present several computational results concerning the Winner Determination problem for Social Welfare maximization. These include hardness of approximation and polynomial time exact and approximation algorithms. We conclude with an evaluation of the Generalized Second Price mechanism in presence of externalities.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Dimitris Fotakis
    • 1
  • Piotr Krysta
    • 2
  • Orestis Telelis
    • 2
  1. 1.School of Electrical and Computer EngineeringNational Technical University of AthensAthensGreece
  2. 2.Department of Computer ScienceUniversity of LiverpoolLiverpoolUK

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