Research Article
Adverse Selection and Auction Design for Internet Display Advertising
@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
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.
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