Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence

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

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents a game theoretic analysis of the generalized second price auc- tion that the company Overture operated in 2004 to sell sponsored search listings on its search engine. We present results that indicate that this auction has a multi- plicity of Nash equilibria. We also show that weak dominance arguments do not in general select a unique Nash equilibrium. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer some preliminary conclu- sions 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.

Keywords: auctions; sponsored search. (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2008-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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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 (2013)
Working Paper: Equilibrium bids in sponsored search auctions: theory and evidence (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:29125

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