02428cam a22003617 4500001000700000003000500007005001700012008004100029100001900070245019600089260006600285490004200351500001900393520083000412530006101242538007201303538003601375690008901411690005801500690010801558690006101666700001701727700002301744700002101767700002101788700002001809700002101829700002201850710004201872830007701914856003801991856003702029w13788NBER20191013230902.0191013s2008 mau||||fs|||| 000 0 eng d1 aCary, Matthew.10aOn Best-Response Bidding in GSP Auctionsh[electronic resource] /cMatthew Cary, Aparna Das, Benjamin Edelman, Ioannis Giotis, Kurtis Heimerl, Anna R. Karlin, Claire Mathieu, Michael Schwarz. aCambridge, Mass.bNational Bureau of Economic Researchc2008.1 aNBER working paper seriesvno. w13788 aFebruary 2008.3 aHow 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. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aC15 - Statistical Simulation Methods: General2Journal of Economic Literature class. 7aD44 - Auctions2Journal of Economic Literature class. 7aL86 - Information and Internet Services • Computer Software2Journal of Economic Literature class. 7aM37 - Advertising2Journal of Economic Literature class.1 aDas, Aparna.1 aEdelman, Benjamin.1 aGiotis, Ioannis.1 aHeimerl, Kurtis.1 aKarlin, Anna R.1 aMathieu, Claire.1 aSchwarz, Michael.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w13788.4 uhttp://www.nber.org/papers/w1378841uhttp://dx.doi.org/10.3386/w13788