General Auction Mechanism for Search Advertising
Gagan Aggarwal, S. Muthukrishnan, David Pal, Martin Pal

TL;DR
This paper introduces a new auction mechanism for search advertising based on stable matchings, providing a truthful, efficient, and flexible solution that generalizes existing methods like GSP and VCG.
Contribution
It models advertising auctions as a stable matching problem with linear utilities, incorporating bidder-specific constraints, and offers a polynomial-time algorithm for finding bidder-optimal stable matchings.
Findings
Existence of stable matchings in the model is guaranteed.
A polynomial-time algorithm for bidder-optimal stable matchings is provided.
The mechanism generalizes GSP and VCG, ensuring truthfulness and flexibility.
Abstract
In sponsored search, a number of advertising slots is available on a search results page, and have to be allocated among a set of advertisers competing to display an ad on the page. This gives rise to a bipartite matching market that is typically cleared by the way of an automated auction. Several auction mechanisms have been proposed, with variants of the Generalized Second Price (GSP) being widely used in practice. A rich body of work on bipartite matching markets builds upon the stable marriage model of Gale and Shapley and the assignment model of Shapley and Shubik. We apply insights from this line of research into the structure of stable outcomes and their incentive properties to advertising auctions. We model advertising auctions in terms of an assignment model with linear utilities, extended with bidder and item specific maximum and minimum prices. Auction mechanisms like the…
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Taxonomy
TopicsConsumer Market Behavior and Pricing · Auction Theory and Applications · Game Theory and Voting Systems
