Encyclopedia of Algorithms

2008 Edition
| Editors: Ming-Yang Kao

Position Auction

2005; Varian
  • Aries Wei Sun
Reference work entry
DOI: https://doi.org/10.1007/978-0-387-30162-4_297

Keywords and Synonyms

Adword auction      

Problem Definition

This problem is concerned with the Nash equilibria of a game based on the ad auction used by Google and Yahoo. This research work [5] is motivated by the huge revenue that the adword auction derives every year. It defines two types of Nash equilibrium in the position auction game, applies economic analysis to the equilibria, and provides some empirical evidence that the Nash equilibria of the position auction describes the basic properties of the prices observed in Google's adword auction reasonably accurately. The problem being studied is closely related to the assignment game studied by [4,1,3]. And [2] has independently examined the problem and developed related results.

The Model and its Notations

Consider the problem of assigning agents \( { a=1,2, \dots,A } \)


Nash Equilibrium Search Engine Pure Strategy Expected Profit Strategy Nash Equilibrium 
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Recommended Reading

  1. 1.
    Demange, G., Gale, D., Sotomayor, M.: Multi-item auctions. J. Polit. Econ. 94(4), 863–72 (1986)CrossRefGoogle Scholar
  2. 2.
    Edelman, B., Ostrovsky, M., Schwartz, M.: Internet advertising and the generalized second price auction. NBER Working Paper, 11765, November 2005Google Scholar
  3. 3.
    Roth, A., Sotomayor, M.: Two-Sided Matching. Cambridge University Press, Cambridge (1990)zbMATHGoogle Scholar
  4. 4.
    Shapely, L., Shubik, M.: The Assignment Game I: the core. Int. J. Game Theor. 1, 111–130 (1972)CrossRefGoogle Scholar
  5. 5.
    Varian, H.R.: Position auctions. Int. J. Ind. Organ. 25(6), 1163–1178 (2007)CrossRefGoogle Scholar

Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  • Aries Wei Sun
    • 1
  1. 1.Department of Computer ScienceCity University of Hong KongHong KongChina