Research Article
Robust Mechanisms for Sponsored Search
@ARTICLE{10.4108/eai.8-8-2015.2260361, author={Mohammad Mahdian and Mukund Sundararajan}, title={Robust Mechanisms for Sponsored Search}, journal={EAI Endorsed Transactions on Serious Games}, volume={3}, number={10}, publisher={ACM}, journal_a={SG}, year={2015}, month={8}, keywords={sponsored search, ad auctions, online advertising, mechanism design, prior-free mechanism design}, doi={10.4108/eai.8-8-2015.2260361} }- Mohammad Mahdian
Mukund Sundararajan
Year: 2015
Robust Mechanisms for Sponsored Search
SG
EAI
DOI: 10.4108/eai.8-8-2015.2260361
Abstract
Sponsored search auctions sell ad positions (impressions) to advertisers on the event of a user query. The value of an advertiser for an ad position (impression), is the product of a private value per click, and a predicted click-through rate (PCTR) known to the auctioneer. A common mechanism for sponsored search auctions is to rank advertisers by their value. Lahaie and Pennock proposed a different ranking scheme based on "squashing'' the PCTRs by raising them to a power less than 1, and used numerical experiments to show that this method leads to increased revenue. In this paper, we prove that a modified form of squashing (called linear squashing) is approximately optimal for maximizing revenue in a model of sponsored search auctions that captures the fact that bid distributions are hard to estimate in a non-manipulable way.
Copyright © 2015 M. Mahdian and M. Sundararajan, licensed to EAI. This is an open access article distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/3.0/), which permits unlimited use, distribution and reproduction in any medium so long as the original work is properly cited.
