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Article
| ACM Transactions on Economics and Computation
| Forthcoming
Convergence of Position Auctions under Myopic Best-Response Dynamics
by
Matthew Cary, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna Karlin, Scott Kominers, Claire Mathieu and Michael Schwarz
|
Abstract
We study the dynamics of multi-round position auctions, considering both the case of exogenous click-through rates and the case in which click-through rates are determined by an endogenous consumer search process. In both contexts, we demonstrate that the dynamic auctions converge to their associated static, envy-free equilibria. Furthermore, convergence is efficient, and the entry of low-quality advertisers does not slow convergence. Because our approach predominantly relies on assumptions common in the sponsored search literature, our results suggest that dynamic position auctions converge more generally.
Keywords: sponsored search;
advertising;
google;
equilibrium selection;
Online Advertising;
Advertising Industry;