2022/01/01 by Michael Ostrovsky, Andrzej Skrzypacz
Business, Management and Accounting · Computer Science · Decision Sciences · Economics, Econometrics and Finance · #Auction Theory and Applications #Consumer Market Behavior and Pricing #Economic theories and models #cs.GT #econ.TH
paper · pdf · doi:10.2139/ssrn.4250550
openalex publication_date 2022/01/01 · openalex created_date 2025/10/10 · arxiv created 2026/07/31 · arxiv updated 2026/08/04 · openalex updated_date 2026/08/04
We revisit the classic result on the (non-)existence of pure-strategy Nash equilibria in the Generalized First-Price Auction for sponsored search advertising and show that the conclusion may be reversed when ads are ranked based on the product of stochastic quality scores and bid amounts, rather than solely on the bids or on the product of bids and deterministic quality scores. Moreover, the expected revenue in the pure strategy equilibrium of the Generalized First-Price Auction may substantially exceed that of the Generalized Second-Price Auction, although under some conditions the relation may also be reversed.