Position Auctions with Externalities
Venue
Proceedings of the 10th Conference on Web and Internet Economics (WINE) (2014), pp. 417-422
Publication Year
2014
Authors
Patrick Hummel, Preston McAfee
BibTeX
Abstract
This paper presents models for predicted click-through rates in position auctions
that take into account the externalities ads shown in other positions may impose on
the probability that an ad in a particular position receives a click. We present a
general axiomatic methodology for how click probabilities are affected by the
qualities of the ads in the other positions, and illustrate that using these axioms
will increase revenue as long as higher quality ads tend to be ranked ahead of
lower quality ads. We also present appropriate algorithms for selecting the optimal
allocation of ads when predicted click-through rates are governed by a natural
special case of this axiomatic model of externalities.
