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| Research on the Generalized Second Price Mechanism of Sponsored Search Auctions Based on Dynamic Gaming Models |
| JIANG Hui,WANG Huanchen,GAO Chaowei |
| (Antai College of Economics and Management, Shanghai Jiangtong University, Shanghai 200052, China) |
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Abstract Aiming at the problem of sponsored search auctions, this article introduced and defined the generalized second price(GSP) mechanism as a simplified VCG(VickreyClarkeGroves) mechanism by stating the advantages and disadvantages of VCG mechanism and analyzing the value structures of positions on the search engine result page(SERP). It proves that when advertisers have separable values, payperclick along with ranking by effective bids will guarantee the realization of VCG equilibrium under GSP mechanism. A quantitative experiment was done and the impacts of ranking rules on equilibrium and efficiency in the dynamic circumstance were discussed. The article as a whole builds a theoretical foundation to explain and predict the phenomenon in real sponsored search auctions.
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Received: 11 March 2009
Published: 30 March 2010
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