@techreport{NBERw13788,
 title = "On Best-Response Bidding in GSP Auctions",
 author = "Matthew Cary and Aparna Das and Benjamin Edelman and Ioannis Giotis and Kurtis Heimerl and Anna R. Karlin and Claire Mathieu and Michael Schwarz",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "13788",
 year = "2008",
 month = "February",
 URL = "http://www.nber.org/papers/w13788",
 abstract = {How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN? We model ad auctions as a dynamic game of incomplete information, so we can study the convergence and robustness properties of various strategies. In particular, we consider best-response bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bids. We focus on a strategy we call Balanced Bidding (bb). If all players use the bb strategy, we show that bids converge to a bid vector that obtains in a complete information static model proposed by Edelman, Ostrovsky and Schwarz (2007). We prove that convergence occurs with probability 1, and we compute the expected time until convergence.},
}