Abstract
I analyze the equilibria of a game based on the ad auction used by Google and Yahoo. This auction is closely related to the assignment game studied by Shapley-Shubik, Demange-Gale-Sotomayer and Roth-Sotomayer. However, due to the special structure of preferences, the equilibria of the ad auction can be calculated explicitly and some known results can be sharpened. I provide some empirical evidence that the Nash equilibria of the position auction describe the basic properties of the prices observed in Google's ad auction reasonably accurately. © 2006 Elsevier B.V. All rights reserved.
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Varian, H. R. (2007). Position auctions. International Journal of Industrial Organization, 25(6), 1163–1178. https://doi.org/10.1016/j.ijindorg.2006.10.002
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