An Experimental Study of Sponsored-Search Auctions

Yeon-Koo Che; Syngjoo Choi; Jinwoo Kim

Auctions, Market Mechanisms, and Their Applications. Second International ICST Conference, AMMA 2011, NewYork, NY, USA, August 22-23, 2011, Revised Selected Papers

Research Article

An Experimental Study of Sponsored-Search Auctions

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@INPROCEEDINGS{10.1007/978-3-642-30913-7_7,
    author={Yeon-Koo Che and Syngjoo Choi and Jinwoo Kim},
    title={An Experimental Study of Sponsored-Search Auctions},
    proceedings={Auctions, Market Mechanisms, and Their Applications. Second International ICST Conference, AMMA 2011, NewYork, NY, USA, August 22-23, 2011, Revised Selected Papers},
    proceedings_a={AMMA},
    year={2012},
    month={10},
    keywords={online advertising sponsored search auction generalized second price auction experiment},
    doi={10.1007/978-3-642-30913-7_7}
}

Yeon-Koo Che
Syngjoo Choi
Jinwoo Kim
Year: 2012
An Experimental Study of Sponsored-Search Auctions
AMMA
Springer
DOI: 10.1007/978-3-642-30913-7_7

Yeon-Koo Che¹^,*, Syngjoo Choi²^,*, Jinwoo Kim³^,*

1: Columbia University and YERI
2: UCL, University College London
3: Yonsei University

*Contact email: yc2271@columbia.edu, syngjoo.choi@ucl.ac.uk, jikim72@gmail.com

Abstract

We study the Generalized Second Price auctions—a standard method for allocating online search advertising—experimentally, considering both the static environment assumed by the prevailing theory and a dynamic game capturing the salient aspects of real-world search advertising auctions. We find that subjects tend to overbid in both treatments relative to the Vickrey-Clarke-Groves outcome suggested as most plausible by the theory, but that their behavior in the dynamic game resembles the behavior in the static game. Our analysis thus lends support to the use of a static game as modeling proxy, but calls into question the prevailing equilibrium predictions.

Keywords: online advertising sponsored search auction generalized second price auction experiment

Published: 2012-10-08

: http://dx.doi.org/10.1007/978-3-642-30913-7_7