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On the Interest of Introducing Randomness in Ad-Word Auctions

Abstract : Search engines play and will still play a major role in the use of networks. Sponsored search auctions is the basic tool for a return on investment in this industry, accounting for an increasing part of the business. We introduce here a model for consumer behavior in the context of ad-word auctions. Considering that unsatisfying answers of the ad-word engine will lead some consumers to perform again the same request later on, we show that displaying only the highest bidding or highest revenue-producing advertisers in a deterministic way is not always the best strategy for the ad-word engine. Instead, some randomization among advertisers can provide higher revenues. We also design a Vickrey-Clarke-Groves auction rule for a display probability and compare it with the current generalized-second-price scheme.
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https://hal.inria.fr/hal-00609531
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Submitted on : Friday, August 8, 2014 - 2:19:53 PM
Last modification on : Tuesday, June 15, 2021 - 4:26:03 PM
Long-term archiving on: : Wednesday, November 26, 2014 - 4:05:32 PM

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Patrick Maillé, Bruno Tuffin. On the Interest of Introducing Randomness in Ad-Word Auctions. Third IFIP TC6 International Conference on Wireless Communications and Information Technology in Developing Countries (WCITD) / IFIP TC 6 International Network of the Future Conference (NF) / Held as Part of World Computer Congress (WCC), Sep 2010, Brisbane, Australia. pp.229-240, ⟨10.1007/978-3-642-15476-8_22⟩. ⟨hal-00609531v2⟩

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