Speaker: Rachel Liu Affiliation: The University of Auckland Time: 4:00 pm Monday, 4 April, 2016 Location: Clock Tower 032 |

We model the Generalized Second-Price Auction for internet advertising as a strategic form game with complete information. We begin with the simplest game in which two advertisers bid against each other over two advertising positions. We show that each advertiser has a unique weakly dominant strategy and there are multiple Nash equilibria. We then study the game with three advertisers and three positions and show that no player has a dominant strategy. Each of the six possible allocations may arise as Nash equilibrium in the three advertiser game. It is not clear which allocation results in the largest welfare loss compared to the socially optimal outcome. No player has a dominant strategy in the general case as well. |