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Externalities among advertisers in sponsored search. (English) Zbl 1233.90203

Persiano, Giuseppe (ed.), Algorithmic game theory. 4th international symposium, SAGT 2011, Amalfi, Italy, October 17–19, 2011. Proceedings. Berlin: Springer (ISBN 978-3-642-24828-3/pbk). Lecture Notes in Computer Science 6982, 105-116 (2011).
Summary: 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.
For the entire collection see [Zbl 1225.91006].

MSC:

90B60 Marketing, advertising
91B26 Auctions, bargaining, bidding and selling, and other market models
91A80 Applications of game theory
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