2013 Fiscal Year Final Research Report

A theoretical analysis of a keyword auction: How rational the current settings of keyword auction are

Research Project

Project/Area Number	23730194
Research Category	Grant-in-Aid for Young Scientists (B)
Allocation Type	Multi-year Fund
Research Field	Economic theory
Research Institution	Kochi University of Technology (2013) Waseda University (2011-2012)
Principal Investigator	KAMIJO Yoshio 高知工科大学, 経営学部, 准教授 (40453972)
Project Period (FY)	2011 – 2013
Keywords	オークション / インターネット検索エンジン / 広告 / ゲーム理論 / コンピュータシミュレーション / 一般化第二価格オークション
Research Abstract	The purpose of this research project is to explore how rational the current settings of keyword auctions are by means of a game theoretic analysis and a computer simulation. In the first study, we explore a slot supply strategy of a search engine. Based on the revenue prediction from a game theoretic analysis, we show that restricting the number of the ads in a search result page and highlighting the top ads are consistent with the revenue maximization of the sellers. In the second study, we explore the bidding behavior of advertisers in a sealed-bid environment, where each bidder does not know the current bids of others. It is shown that even in a sealed bid environment, bid profie of advertisers converges to some equilibrium point in a one-shot game. Simulation results verify that a sealed-bid environment would be beneficial to search engines.

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