Revenue Enhancement in Ad Auctions

  • Michal Feldman
  • Reshef Meir
  • Moshe Tennenholtz
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 7090)


We consider the revenue of the Generalized Second Price (GSP) auction, which is one of the most widely used mechanisms for ad auctions. While the standard model of ad auctions implies that the revenue of GSP in equilibrium is at least as high as the revenue of VCG, the literature suggests that it is not strictly higher due to the selection of a natural equilibrium that coincides with the VCG outcome. We propose a randomized modification of the GSP mechanism, which eliminates the low-revenue equilibria of the GSP mechanism under some natural restrictions. The proposed mechanism leads to a higher revenue to the seller.


Price Auction Lower Equilibrium High Revenue Equilibrium Selection Reserve Prex 
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Copyright information

© Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  • Michal Feldman
    • 1
    • 4
  • Reshef Meir
    • 1
    • 2
  • Moshe Tennenholtz
    • 2
    • 3
  1. 1.Hebrew University of JerusalemIsrael
  2. 2.Microsoft Research HerzliaIsrael
  3. 3.Technion-Israel Institute of TechnologyIsrael
  4. 4.Microsoft Research New EnglandIsrael

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