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- Title
Nontruthful Position Auctions Are More Robust to Misspecification.
- Authors
Dütting, Paul; Fischer, Felix; Parkes, David C.
- Abstract
We consider the classical model of sponsored search due to Edelman et al. and Varian and examine how robust standard position auctions are to a misspecification of the position-dependent quality factors used by this model. We show that under both complete and incomplete information a nontruthful position auction admits an efficient equilibrium for a strictly broader range of parameter values than the Vickrey-Clarke-Groves (VCG) mechanism, which would be truthful if the parameters were specified correctly. Our result for complete information concerns the generalized second-price (GSP) mechanism and is driven by a detailed understanding of the Nash equilibrium polytopes of the VCG mechanism and the GSP mechanism. Our result for incomplete information concerns the generalized first-price (GFP) mechanism and uses a surprising connection between the unique candidate equilibrium bidding functions of the VCG mechanism and the GFP mechanism. Funding: F. Fischer was supported by the Engineering and Physical Sciences Research Council [Grant EP/T015187/1] and Einstein Stiftung Berlin.
- Subjects
QUALITY factor; NASH equilibrium; AUCTIONS; PHYSICAL sciences; POLYTOPES
- Publication
Mathematics of Operations Research, 2024, Vol 49, Issue 2, p901
- ISSN
0364-765X
- Publication type
Article
- DOI
10.1287/moor.2023.1380