Mechanism Design for Ad Auctions with Display Prices
- URL: http://arxiv.org/abs/2303.13192v1
- Date: Thu, 23 Mar 2023 11:46:48 GMT
- Title: Mechanism Design for Ad Auctions with Display Prices
- Authors: Bin Li, Yahui Lei
- Abstract summary: We study ad auctions with display prices from the perspective of mechanism design.
We derive the welfare-maximizing and revenue-maximizing auctions for any realization of the price profile.
Our results reveal that the display prices do affect the design of ad auctions and the platform can leverage such information to optimize the performance of ad delivery.
- Score: 6.895321502252051
- License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
- Abstract: In many applications, ads are displayed together with the prices, so as to
provide a direct comparison among similar products or services. The
price-displaying feature not only influences the consumers' decisions, but also
affects the advertisers' bidding behaviors. In this paper, we study ad auctions
with display prices from the perspective of mechanism design, in which
advertisers are asked to submit both the costs and prices of their products. We
provide a characterization for all incentive compatible auctions with display
prices, and use it to design auctions under two scenarios. In the former
scenario, the display prices are assumed to be exogenously determined. For this
setting, we derive the welfare-maximizing and revenue-maximizing auctions for
any realization of the price profile. In the latter, advertisers are allowed to
strategize display prices in their own interests. We investigate two families
of allocation policies within the scenario and identify the equilibrium prices
accordingly. Our results reveal that the display prices do affect the design of
ad auctions and the platform can leverage such information to optimize the
performance of ad delivery.
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