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'Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence'.

Event details of Tinbergen Labour Seminar Series: Martin Pesendorfer (London School of Economics)
Date 2 October 2007
Time 16:00 -17:15
Location Gijsbert van Tienhovengebouw

Equilibrium Bids in Sponsored Search Auctions: Theory and Evidence

Martin Pesendorfer (London School of Economics)
(with Tilman Borgers, Ingemar Cox and Vaclav Petricek)

This paper presents a game theoretic analysis of the generalized second price auction that Yahoo operates to sell sponsored search listings on its search engine. We present results that indicate that this auction has a multiplicity of Nash equilibria. We also show that weak dominance arguments do not in general select a unique Nash equilibrium. We then analyze bid data assuming that advertisers choose Nash equilibrium bids. We offer some preliminary conclusions about advertisers' true willingness to bid for sponsored search listings.

Gijsbert van Tienhovengebouw

Roetersstraat 31
1018 WB Amsterdam