Equilibrium bids in sponsored search auctions: theory and evidence

Tilman Börgers (), Ingemar Cox, Martin Pesendorfer and Vaclav Petricek

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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: 2013-11
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (15)

Published in American Economic Journal: Microeconomics, November, 2013, 5(4), pp. 163-187. ISSN: 1945-7669

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http://eprints.lse.ac.uk/46841/ Open access version. (application/pdf)

Related works:
Journal Article: 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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:46841

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