On Expressing Value Externalities in Position Auctions

Externalities are recognized to exist in the sponsored search market, where two co-located ads compete for user attention. Existing work focuses on the effect of another ad on the quantity of clicks received. We focus instead on the negative effect of another ad on the value per click, and propose a general model of externalities, in which a bidder has no value for a slot under a set of certain conditions, each on one other bidder’s allocated slot. We provide a generic greedy algorithm for the winner determination problem (WDP) in this model together with a pricing scheme that closely follow the Generalized Second Price (GSP) auction used in practice. For value externalities that satisfy a property of downward-monotonicity, these mechanisms provide no new opportunities for manipulation beyond the ones already available via untruthful claims about bid value in GSP under the standard slot auction model. Our main instantiation of downward-monotonic constraints is an identity-specifi...

• Type: Journal
• Year: 2011
• Where: AAAI
• Authors: Florin Constantin, Malvika Rao, Chien-Chung Huang, David C. Parkes
• Keywords: AAAI 2011, Case Complexity, Greedy Algorithm, Intelligent Agents, Parameter Algorithms