Double-Sided Markets with Strategic Multi-dimensional Players

TL;DR

This paper studies mechanisms for double-sided markets with multi-dimensional strategic players, focusing on online advertising data markets, and proposes both deterministic and randomized mechanisms to optimize social welfare.

Contribution

It introduces a new model for online advertising data markets with multi-dimensional strategic players and designs two mechanisms tailored for this setting.

Findings

Deterministic mechanism related to trade reduction literature.

Randomized mechanism handles more general models.

Mechanisms improve efficiency in online data markets.

Abstract

We consider mechanisms for markets that are double-sided and have players with multi-dimensional strategic spaces on at least one side. The players of the market are strategic, and act to optimize their own utilities. The mechanism designer, on the other hand, aims to optimize a social goal, i.e., the gain from trade. We focus on one example of this setting which is motivated by the foreseeable future form of online advertising. Online advertising currently supports some of the most important Internet services, including: search, social media and user generated content sites. To overcome privacy concerns, it has been suggested to introduce user information markets through information brokers into the online advertising ecosystem. Such markets give users control over which data get shared in the online advertising exchange. We describe a model for the above foreseeable future form of online advertising, and design two mechanisms for the exchange of this model: a deterministic mechanism which is related to the vast literature on mechanism design through trade reduction and allows players with a multi-dimensional strategic space, and a randomized mechanism which can handle a more general version of the model.