Simplified mechanisms with an application to sponsored-search auctions

B-Tier
Journal: Games and Economic Behavior
Year: 2010
Volume: 70
Issue: 1
Pages: 62-70

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

A mechanism can be simplified by restricting its message space. If the restricted message spaces satisfy a certain "outcome closure property," then the simplification is "tight": for every [epsilon][greater-or-equal, slanted]0, any [epsilon]-Nash equilibrium of the simplified mechanism is also an [epsilon]-Nash equilibrium of the unrestricted mechanism. Prominent auction and matching mechanisms are tight simplifications of mechanisms studied in economic theory and often incorporate price-adjustment features that facilitate simplification. The generalized second-price auction used for sponsored-search advertising is a tight simplification of a series of second-price auctions that eliminates the lowest revenue equilibrium outcomes and leaves intact only higher revenue equilibria.

Technical Details

RePEc Handle
repec:eee:gamebe:v:70:y:2010:i:1:p:62-70
Journal Field
Theory
Author Count
1
Added to Database
2026-01-26