2021/05/19 by Dirk Bergemann, Paul Duetting, Bergemann, Dirk +5
Business, Management and Accounting · Decision Sciences · #Auction Theory and Applications #Computer Science and Game Theory (cs.GT) #Consumer Market Behavior and Pricing #FOS: Computer and information sciences #FOS: Economics and business #Game Theory and Applications #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2105.09375
openalex publication_date 2021/05/19 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We analyze the optimal information design in a click-through auction with fixed valuations per click, but stochastic click-through rates. While the auctioneer takes as given the auction rule of the click-through auction, namely the generalized second-price auction, the auctioneer can design the information flow regarding the click-through rates among the bidders. A natural requirement in this context is to ask for the information structure to be calibrated in the learning sense. With this constraint, the auction needs to rank the ads by a product of the bid and an unbiased estimator of the click-through rates, and the task of designing an optimal information structure is thus reduced to the task of designing an optimal unbiased estimator. We show that in a symmetric setting with uncertainty about the click-through rates, the optimal information structure attains both social efficiency and surplus extraction. The optimal information structure requires private (rather than public) signals to the bidders. It also requires correlated (rather than independent) signals, even when the underlying uncertainty regarding the click-through rates is independent. Beyond symmetric settings, we show that the optimal information structure requires partial information disclosure.