The generalized first-price auction (GFP) is a non-truthful auction mechanism for sponsored search (a.k.a. position auctions).[1] In sponsored search n bidders compete for the assignment of k slots. Each slot has an associate click-through rate, the click-through rates are decreasing from top to bottom. The GFP mechanism asks each bidder for a bid. Then the highest bidder gets the first slot, the second-highest, the second slot and so on. On each click the highest bidder pays his bid on the first slot, the second highest bidder pays his bid on the second slot, and so on.
The GFP mechanism was the first mechanism to find application in sponsored search, replacing the "flat fee" and "per-impression" model that was the standard. Overture adopted the GFP mechanism in 1997, and provided service to Yahoo! and MSN. Although very successful initially, bidders quickly learned how to manipulate the mechanism. Bidding patterns exhibited a characteristic saw-tooth pattern,[2] and the mechanism need not possess a (pure) Nash equilibrium.[1] These deficiencies lead to the replacement of the GFP mechanism in practice, and the adoption of alternate auction designs.
Recent work by Hoy et al.[3] and Dütting et al.[4] shows that the deficiencies of the GFP mechanism can be ascribed to its bidding interface, and that adopting a more expressive bidding interface guarantees the existence of an efficient Nash equilibrium under complete information as well as an efficient Bayes-Nash equilibrium under incomplete information.
^ abEdelman, Ben; Ostrovsky, Michael; Schwarz, Michael (2007). "Internet Advertising and the Generalized-Second Price Auction: Selling Billions of Dollars worth of Keywords". American Economic Review. 97 (1): 242–259. CiteSeerX10.1.1.333.8132. doi:10.1257/aer.97.1.242.
^Edelman, Ben; Ostrovsky, Michael (2007). "Strategic Bidder Behavior in Sponsored Search Auctions". Decision Support Systems. 43 (1): 192–198. CiteSeerX10.1.1.399.9154. doi:10.1016/j.dss.2006.08.008.
^Hoy, Darrell; Jain, Kamal; Wilkens, Chris (2013). "A Dynamic Axiomatic Approach to First-Price Auctions". Proceedings of the 14th Conference on Economics and Computation (EC'13): 242–259. arXiv:1304.7718.
^Dütting, Paul; Fischer, Felix; Parkes, David C. (2013). "Expressiveness and Robustness of First-Price Position Auctions". Proceedings of the 15th Conference on Economics and Computation (EC'14): 57–74. arXiv:1307.5216.
January 01, 1970
generalized, first, price, auction, this, article, relies, excessively, references, primary, sources, please, improve, this, article, adding, secondary, tertiary, sources, find, sources, news, newspapers, books, scholar, jstor, january, 2024, learn, when, remo. This article relies excessively on references to primary sources Please improve this article by adding secondary or tertiary sources Find sources Generalized first price auction news newspapers books scholar JSTOR January 2024 Learn how and when to remove this message The generalized first price auction GFP is a non truthful auction mechanism for sponsored search a k a position auctions 1 In sponsored search n bidders compete for the assignment of k slots Each slot has an associate click through rate the click through rates are decreasing from top to bottom The GFP mechanism asks each bidder for a bid Then the highest bidder gets the first slot the second highest the second slot and so on On each click the highest bidder pays his bid on the first slot the second highest bidder pays his bid on the second slot and so on The GFP mechanism was the first mechanism to find application in sponsored search replacing the flat fee and per impression model that was the standard Overture adopted the GFP mechanism in 1997 and provided service to Yahoo and MSN Although very successful initially bidders quickly learned how to manipulate the mechanism Bidding patterns exhibited a characteristic saw tooth pattern 2 and the mechanism need not possess a pure Nash equilibrium 1 These deficiencies lead to the replacement of the GFP mechanism in practice and the adoption of alternate auction designs Recent work by Hoy et al 3 and Dutting et al 4 shows that the deficiencies of the GFP mechanism can be ascribed to its bidding interface and that adopting a more expressive bidding interface guarantees the existence of an efficient Nash equilibrium under complete information as well as an efficient Bayes Nash equilibrium under incomplete information See also editGeneralized second price auction Vickrey Clarke Groves auction First price sealed bid auction AdWordsReferences edit a b Edelman Ben Ostrovsky Michael Schwarz Michael 2007 Internet Advertising and the Generalized Second Price Auction Selling Billions of Dollars worth of Keywords American Economic Review 97 1 242 259 CiteSeerX 10 1 1 333 8132 doi 10 1257 aer 97 1 242 Edelman Ben Ostrovsky Michael 2007 Strategic Bidder Behavior in Sponsored Search Auctions Decision Support Systems 43 1 192 198 CiteSeerX 10 1 1 399 9154 doi 10 1016 j dss 2006 08 008 Hoy Darrell Jain Kamal Wilkens Chris 2013 A Dynamic Axiomatic Approach to First Price Auctions Proceedings of the 14th Conference on Economics and Computation EC 13 242 259 arXiv 1304 7718 Dutting Paul Fischer Felix Parkes David C 2013 Expressiveness and Robustness of First Price Position Auctions Proceedings of the 15th Conference on Economics and Computation EC 14 57 74 arXiv 1307 5216 Retrieved from https en wikipedia org w index php title Generalized first price auction amp oldid 1192905950, wikipedia, wiki, book, books, library,
