TY - JOUR
T1 - Theoretical and experimental investigations of the performance of keyword auction mechanisms
AU - Fukuda, Emiko
AU - Kamijo, Yoshio
AU - Takeuchi, Ai
AU - Masui, Michiharu
AU - Funaki, Yukihiko
PY - 2013/9
Y1 - 2013/9
N2 - Two keyword auction mechanisms, the Generalized Second-Price auction (GSP) and the Vickrey-Clarke-Groves mechanism (VCG), were compared theoretically and experimentally. The former is widely used in practice; the latter is not, but it has a dominant strategy equilibrium where all participants bid their true values. In the theoretical investigation, by applying the "locally envy-free Nash equilibrium" to the VCG, we found that the allocations are efficient and that upper and lower bounds of the auctioneer's revenue coincide in the two mechanisms. A laboratory experiment, in which the revenues and efficiencies were similar in both mechanisms, supported this result.
AB - Two keyword auction mechanisms, the Generalized Second-Price auction (GSP) and the Vickrey-Clarke-Groves mechanism (VCG), were compared theoretically and experimentally. The former is widely used in practice; the latter is not, but it has a dominant strategy equilibrium where all participants bid their true values. In the theoretical investigation, by applying the "locally envy-free Nash equilibrium" to the VCG, we found that the allocations are efficient and that upper and lower bounds of the auctioneer's revenue coincide in the two mechanisms. A laboratory experiment, in which the revenues and efficiencies were similar in both mechanisms, supported this result.
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U2 - 10.1111/1756-2171.12026
DO - 10.1111/1756-2171.12026
M3 - Article
AN - SCOPUS:84889636875
SN - 0741-6261
VL - 44
SP - 438
EP - 461
JO - RAND Journal of Economics
JF - RAND Journal of Economics
IS - 3
ER -