Why Do Competitive Markets Converge to First-Price Auctions?
Abstract
We consider a setting in which bidders participate in multiple auctions run by different sellers, and optimize their bids for the \emph{aggregate} auction. We analyze this setting by formulating a game between sellers, where a seller's strategy is to pick an auction to run. Our analysis aims to shed light on the recent change in the Display Ads market landscape: here, ad exchanges (sellers) were mostly running second-price auctions earlier and over time they switched to variants of the first-price auction, culminating in Google's Ad Exchange moving to a first-price auction in 2019. Our model and results offer an explanation for why the first-price auction occurs as a natural equilibrium in such competitive markets.
Keywords
Cite
@article{arxiv.2001.06074,
title = {Why Do Competitive Markets Converge to First-Price Auctions?},
author = {Renato Paes Leme and Balasubramanian Sivan and Yifeng Teng},
journal= {arXiv preprint arXiv:2001.06074},
year = {2020}
}
Comments
The Web Conference 2020 (WWW'20)