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Dynamic Cost-Per-Action Mechanisms and Applications to Online Advertising

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  • Hamid Nazerzadeh
  • Amin Saberi
  • Rakesh Vohra

Abstract

We examine the problem of allocating a resource repeatedly over time amongst a set of agents. The utility that each agent derives from consumption of the item is private information to that agent and, prior to consumption may be unknown to that agent. The problem is motivated by keyword auctions, where the resource to be allocated is a slot on a search page. We describe a mechanism based on a sampling-based learning algorithm that under suitable assumptions is asymptotically individually rational, asymptotically Bayesian incentive compatible and asymptotically ex-ante efficient. The mechanism can be interpreted as a cost per action keyword auction.

Suggested Citation

  • Hamid Nazerzadeh & Amin Saberi & Rakesh Vohra, 2007. "Dynamic Cost-Per-Action Mechanisms and Applications to Online Advertising," Discussion Papers 1450, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:1450
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    References listed on IDEAS

    as
    1. Dirk Bergemann & Juuso Välimäki, 2006. "Efficient Dynamic Auctions," Levine's Bibliography 321307000000000580, UCLA Department of Economics.
    2. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, October.
    3. Susan Athey & Ilya Segal, 2013. "An Efficient Dynamic Mechanism," Econometrica, Econometric Society, vol. 81(6), pages 2463-2485, November.
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    Cited by:

    1. Deb, Rahul, 2008. "Optimal Contracting Of New Experience Goods," MPRA Paper 9880, University Library of Munich, Germany.

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    More about this item

    Keywords

    dynamic auctions; sponsored search;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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