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  • July 2014
  • Article
  • ACM Transactions on Economics and Computation

Convergence of Position Auctions under Myopic Best-Response Dynamics

By: Matthew Cary, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna Karlin, Scott Duke Kominers, Claire Mathieu and Michael Schwarz
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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

Citation

Cary, Matthew, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna Karlin, Scott Duke Kominers, Claire Mathieu, and Michael Schwarz. "Convergence of Position Auctions under Myopic Best-Response Dynamics." ACM Transactions on Economics and Computation 2, no. 3 (July 2014): 1–20.
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About The Author

Scott Duke Kominers

Entrepreneurial Management
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More from the Authors
  • Collusion in Brokered Markets By: John William Hatfield, Scott Duke Kominers and Richard Lowery
  • Harvard Students Should Ignore Calls to Boycott Israel Trek By: Jesse M. Fried, Paul A. Gompers, Scott Kominers and Mark C. Poznansky
  • O2X: Optimizing to the X By: Scott Duke Kominers, Thomas Jennings and Maisie Wiltshire-Gordon
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