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Pacing Equilibrium in First-Price Auction Markets | | Vincent Conitzer
; Christian Kroer
; Debmalya Panigrahi
; Okke Schrijvers
; Eric Sodomka
; Nicolas E. Stier-Moses
; Chris Wilkens
; | | Date: |
17 Nov 2018 | | Abstract: | In ad auctions--the prevalent monetization mechanism of Internet
companies--advertisers compete for online impressions in a sequential auction
market. Since advertisers are typically budget-constrained, a common tool
employed to improve their ROI is that of pacing, i.e., uniform scaling of their
bids to preserve their budget for a longer duration. If the advertisers are
excessively paced, they end up not spending their budget, while if they are not
sufficiently paced, they use up their budget too soon. Therefore, it is
important that they are paced at just the right amount, a solution concept that
we call a pacing equilibrium. In this paper, we study pacing equilibria in the
context of first-price auctions, which are popular in the theory of ad
mechanisms. We show existence, uniqueness, and efficient computability of
first-price pacing equilibria (FPPE), while also establishing several other
salient features of this solution concept. In the process, we uncover a sharp
contrast between these solutions and second price pacing equilibria (SPPE), the
latter being known to produce non-unique, fragile solutions that are also
computationally hard to obtain. Simulations show that FPPE have better revenue
properties than SPPE, that bidders have lower ex-post regret, and that
incentives to misreport budgets for thick markets are smaller. | | Source: | arXiv, 1811.7166 | | Services: | Forum | Review | PDF | Favorites | |
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