Position Auctions with Externalities

  • Patrick Hummel
  • R. Preston McAfee
Conference paper

DOI: 10.1007/978-3-319-13129-0_33

Volume 8877 of the book series Lecture Notes in Computer Science (LNCS)
Cite this paper as:
Hummel P., McAfee R.P. (2014) Position Auctions with Externalities. In: Liu TY., Qi Q., Ye Y. (eds) Web and Internet Economics. WINE 2014. Lecture Notes in Computer Science, vol 8877. Springer, Cham

Abstract

This paper presents models for predicted click-through rates in position auctions that take into account the externalities ads shown in other positions may impose on the probability that an ad in a particular position receives a click. We present a general axiomatic methodology for how click probabilities are affected by the qualities of the ads in the other positions, and illustrate that using these axioms will increase revenue as long as higher quality ads tend to be ranked ahead of lower quality ads. We also present appropriate algorithms for selecting the optimal allocation of ads when predicted click-through rates are governed by a natural special case of this axiomatic model of externalities.

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Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  • Patrick Hummel
    • 1
  • R. Preston McAfee
    • 2
  1. 1.Google Inc.USA
  2. 2.Microsoft Corp.USA