Repeated budgeted second price ad auction

Asaph Arnon, Yishay Mansour

Research output: Contribution to journalArticlepeer-review

Abstract

Our main goal is to abstract existing repeated sponsored search ad auction mechanisms which incorporate budgets, and study their equilibrium and dynamics. Our abstraction has multiple agents bidding repeatedly for multiple identical items (such as impressions in an ad auction). The agents are budget limited and have a value per item. We abstract this repeated interaction as a one-shot game, which we call budget auction, where agents submit a bid and a budget, and then items are sold by a sequential second price auction. Once an agent exhausts its budget it does not participate in the proceeding auctions. Our main result shows that if agents bid conservatively (never bid above their value) then there always exists a pure Nash equilibrium. We also study simple dynamics of repeated budget auctions, showing their convergence to a Nash equilibrium for two agents and for multiple agents with identical budgets.

Original languageEnglish
Pages (from-to)453-478
Number of pages26
JournalTheory of Computing Systems
Volume54
Issue number3
DOIs
StatePublished - Apr 2014

Keywords

  • Algorithmic game theory
  • Auctions
  • Budget
  • Sponsored search

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