Bidding behaviors for a keyword auction in a sealed-bid environment

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

A keyword auction is conducted by Internet search engines to sell advertising slots listed on the search results page. Although much of the literature assumes the dynamic bidding strategy that utilizes the current bids of other advertisers, such information is, in practice, not available for participants in the auction. This paper explores the bidding behavior of advertisers in a sealed-bid environment, where each bidder does not know the current bids of others. This study considers secure bidding with a trial bid (SBT) as the bid adjustment process used by the advertisers, which is functional in a sealed-bid environment. It is shown that the SBT bid adjustment process converges to some equilibrium point in a one-shot game irrespective of the initial bid profile. Simulation results verify that a sealed-bid environment would be beneficial to search engines.

Original languageEnglish
Pages (from-to)371-378
Number of pages8
JournalDecision Support Systems
Volume56
Issue number1
DOIs
Publication statusPublished - 2013 Dec
Externally publishedYes

Keywords

  • Dynamic game of incomplete information
  • Internet advertisements
  • Keyword auction
  • Sealed-bid environment

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems
  • Developmental and Educational Psychology
  • Arts and Humanities (miscellaneous)
  • Information Systems and Management

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