Dynamic Online-Advertising Auctions as Stochastic Scheduling
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Acemoglu_Dynamic online.pdf
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220.46 KB
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Author(s)
Menache, Ishai
Ozdaglar, Asuman E.
Srikant, R.
Acemoglu, Daron
Date Issued
July 2009
Journal
Proceedings of the NetEcon '09: Workshop on the Economics of Networks, Systems and Computation
Citation
Menache, Ishai, Asuman Ozdaglar, R. Srikant, and Daron Acemoglu. "Dynamic Online-Advertising Auctions as Stochastic Scheduling." Proceedings of the NetEcon '09: Workshop on the Economics of Networks, Systems and Computation, Stanford, California, July 7, 2009.
Version
Author's final manuscript
Abstract
We study dynamic models of online-advertising auctions in the Internet: advertisers compete for space on a web page over multiple time periods, and the web page displays ads in differentiated slots based on their bids and other considerations. The complex interactions between the advertisers and the website (which owns the web page) is modeled as a dynamic game. Our goal is to derive ad-slot placement and pricing strategies which maximize the expected revenue of the website. We show that the problem can be transformed into a scheduling problem familiar to queueing theorists. When only one advertising slot is available on a webpage, we derive the optimal revenue-maximizing solution by making connections to the familiar cμ rule used in queueing theory. More generally, we show that a cμ-like rule can serve as a good suboptimal solution, while the optimal solution itself may be computed using dynamic programming techniques.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
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Creative Commons Attribution-Noncommercial-Share Alike 3.0
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DOI of Published Version
http://netecon.seas.harvard.edu/NetEcon09/index09.html
