Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence

Tilman B?rgers, Ingemar Cox, Martin Pesendorfer and Vaclav Petricek

American Economic Journal: Microeconomics, 2013, vol. 5, issue 4, 163-87

Abstract: This paper presents a game theoretic analysis of the generalized second-price auction that the company Overture operated in 2004 to sell sponsored search listings on search engines. We construct a model that embodies few prior assumptions about parameters, and we present results that indicate that this model has under quite general assumptions a multiplicity of Nash equilibria. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer preliminary conclusions about advertisers' true willingness to bid for sponsored search listings. We find that advertisers' true willingness to bid is multi-dimensional and decreasing in listing position.

JEL-codes: D44 L86 M31 M37 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/mic.5.4.163
References: Add references at CitEc
Citations: View citations in EconPapers (26)

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Related works:
Working Paper: Equilibrium bids in sponsored search auctions: theory and evidence (2013)
Working Paper: Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence (2008)
Working Paper: Equilibrium bids in sponsored search auctions: theory and evidence (2007)
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