Competitive Targeted Advertising Over Networks
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Ozdaglar_Competitive targeted.pdf
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412.27 KB
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Author(s)
Bimpikis, Kostas
Yildiz, Ercan
Koksal, Asuman E.
Date Issued
February 2016
Journal
Operations Research
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Citation
Bimpikis, Kostas et al. “Competitive Targeted Advertising Over Networks.” Operations Research 64, 3 (June 2016): 705–720 © 2016 Institute for Operations Research and the Management Sciences (INFORMS)
Version
Author's final manuscript
Abstract
Recent advances in information technology have allowed firms to gather vast amounts of data regarding consumers’ preferences and the structure and intensity of their social interactions. This paper examines a game-theoretic model of competition between firms that can target their marketing budgets to individuals embedded in a social network. We provide a sharp characterization of the optimal targeted advertising strategies and highlight their dependence on the underlying social network structure. Furthermore, we provide conditions under which it is optimal for the firms to asymmetrically target a subset of the individuals and establish a lower bound on the ratio of their payoffs in these asymmetric equilibria. Finally, we find that at equilibrium firms invest inefficiently high in targeted advertising and the extent of the inefficiency is increasing in the centralities of the agents they target. Taken together, these findings shed light on the effect of the network structure on the outcome of marketing competition between the firms.
MIT Department
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
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Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1287/opre.2015.1430
