Strategic Bidding Behaviors in Nondecreasing Sponsored Search Auctions

Chen-Kun Tsung, Hann-Jang Ho and Sing-Ling Lee

Mathematical Problems in Engineering, 2013, vol. 2013, 1-8

Abstract:

To realize the specific results in the sponsored search auctions, most advertisers submit particular bid prices. The bidding behaviors with specific purposes are called as the strategic bidding. However, some strategic bidding behaviors will result in negative effects, such as the elimination of the equilibrium and the payment increase for some advertisers. The bidding behaviors with negative results are termed as the vindictive bidding. We survey four strategic bidding behaviors which include a rational bidding and three vindictive bidding strategies. In this paper, we study the relationship between the effects resulted by the vindictive bidding and the valuations of the vindictive advertisers. In our experiments, the search engine provider (SEP) is benefited by all vindictive bidding behaviors, and the increment of the SEP's revenue is proportional to the degree of the vindictiveness. Bidding vindictively without sacrificing the own utility improves the advertiser's utility with high probability. Moreover, we observe that the SEP's revenue is improved by the following situations. First, the vindictive advertiser with low valuation in the keywords with high market value results in more SEP's revenue than that in the keywords with low market value. The second case is to raise the bidding competition between advertisers.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:hin:jnlmpe:206386

DOI: 10.1155/2013/206386

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