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The Third Conference on Auctions, Market Mechanisms and Their Applications

Research Article

Adverse Selection and Auction Design for Internet Display Advertising

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BibTeX Plain Text
  • @INPROCEEDINGS{10.4108/eai.8-8-2015.2260678,
        author={Nicholas Arnosti and Marissa Beck and Paul Milgrom},
        title={Adverse Selection and Auction Design for Internet Display Advertising},
        proceedings={The Third Conference on Auctions, Market Mechanisms and Their Applications},
        publisher={ACM},
        proceedings_a={AMMA},
        year={2015},
        month={8},
        keywords={auctions adverse selection market design},
        doi={10.4108/eai.8-8-2015.2260678}
    }
    
  • Nicholas Arnosti
    Marissa Beck
    Paul Milgrom
    Year: 2015
    Adverse Selection and Auction Design for Internet Display Advertising
    AMMA
    ICST
    DOI: 10.4108/eai.8-8-2015.2260678
Nicholas Arnosti1,*, Marissa Beck1, Paul Milgrom1
  • 1: Stanford University
*Contact email: narnosti@stanford.edu

Abstract

We model an online display advertising environment with brand advertisers and better-informed performance advertisers, and seek an auction mechanism that is strategy-proof, anonymous and insulates brand advertisers from adverse selection. We find that the only such mechanism that is also false-name proof assigns the item to the highest bidding performance advertiser only when the ratio of the highest bid to the second highest bid is sufficiently large. For fat-tailed match-value distributions, this new mechanism captures most of the gains from good matching and improves match values substantially compared to the common practice of setting aside impressions in advance.

Keywords
auctions adverse selection market design
Published
2015-08-13
Publisher
ACM
http://dx.doi.org/10.4108/eai.8-8-2015.2260678
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