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Keyword auctions were widely used by search engines to sell the advertisement on the result pages. To date, the most widely used auction mechanism is wGSP (weighted and generalized second-price). This paper presents an optimal pricing strategy under wGSP for advertiser to bid keywords for their websites. In brief, the
We analyze a game‐theoretic model to explore the impact of organic links (links generated by the search engine algorithm) and popular versus niche keywords on bidding strategies in sponsored link position auctions. In contrast to results in earlier literature, we find that with organic links the firm with
Strategic bidding coupled with the GSP pricing mechanism is known to lead to aggressive bidding behaviour and Competitor Busting in keyword auctions. We introduce a new pricing mechanism, named Penalized Second Pricing (PSP), to help reducing the unfair effects of aggressive bidding.The performances of GSP and PSP are
In recent years, the listing service is widely used in search site such as Yahoo!, Google, and MSN. In the list service, Advertising rate and advertising order are decided by the auction that is called Generalized Second Price Auction (GSP). There are a lot of researches on GSP. However, in those researches, the advertisement is mutually independent. Additionally, the value of advertisement is not...
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