More Like this

1. Individually-Fair Auctions for Multi-Slot Sponsored Search

   Chawla, Shuchi; Rezvan, Rojin; Sauerberg, Nathaniel (June 2022, Foundations of Responsible Computing)

   We design fair-sponsored search auctions that achieve a near-optimal tradeoff between fairness and quality. Our work builds upon the model and auction design of Chawla and Jagadeesan, who considered the special case of a single slot. We consider sponsored search settings with multiple slots and the standard model of click-through rates that are multiplicatively separable into an advertiser-specific component and a slot-specific component. When similar users have similar advertiser-specific click-through rates, our auctions achieve the same near-optimal tradeoff between fairness and quality. When similar users can have different advertiser-specific preferences, we show that a preference-based fairness guarantee holds. Finally, we provide a computationally efficient algorithm for computing payments for our auctions as well as those in previous work, resolving another open direction from Chawla and Jagadeesan. 

   more » « less
2. How Do Digital Advertising Auctions Impact Product Prices?

   https://doi.org/10.1093/restud/rdae087  

   Bergemann, Dirk; Bonatti, Alessandro; Wu, Nicholas (August 2024, Review of Economic Studies)

   Abstract We present a model of digital advertising with three key features: (1) advertisers can reach consumers on and off a platform, (2) additional data enhances the value of advertiser–consumer matches, and (3) the allocation of advertisements follows an auction-like mechanism. We contrast data-augmented auctions, which leverage the platform’s data advantage to improve match quality, with managed-campaign mechanisms that automate match formation and price-setting. The platform-optimal mechanism is a managed campaign that conditions the on-platform prices for sponsored products on the off-platform prices set by all advertisers. This mechanism yields the efficient on-platform allocation but inefficiently high off-platform product prices. It attains the vertical integration profit for the platform and the advertisers, and it increases off-platform product prices while decreasing consumer surplus, relative to data-augmented auctions. 

   more » « less
3. Bayesian Calibrated Click-Through Auctions

   https://doi.org/10.4230/LIPIcs.ICALP.2024.44  

   Chen, Junjie; Li, Minming; Xu, Haifeng; Zuo, Song (January 2024, Schloss Dagstuhl – Leibniz-Zentrum für Informatik)

   Bringmann, Karl; Grohe, Martin; Puppis, Gabriele; Svensson, Ola (Ed.)

   We study information design in click-through auctions, in which the bidders/advertisers bid for winning an opportunity to show their ads but only pay for realized clicks. The payment may or may not happen, and its probability is called the click-through rate (CTR). This auction format is widely used in the industry of online advertising. Bidders have private values, whereas the seller has private information about each bidder’s CTRs. We are interested in the seller’s problem of partially revealing CTR information to maximize revenue. Information design in click-through auctions turns out to be intriguingly different from almost all previous studies in this space since any revealed information about CTRs will never affect bidders' bidding behaviors - they will always bid their true value per click - but only affect the auction’s allocation and payment rule. In some sense, this makes information design effectively a constrained mechanism design problem. Our first result is an FPTAS to compute an approximately optimal mechanism under a constant number of bidders. The design of this algorithm leverages Bayesian bidder values which help to "smooth" the seller’s revenue function and lead to better tractability. The design of this FPTAS is complex and primarily algorithmic. Our second main result pursues the design of "simple" mechanisms that are approximately optimal yet more practical. We primarily focus on the two-bidder situation, which is already notoriously challenging as demonstrated in recent works. When bidders' CTR distribution is symmetric, we develop a simple prior-free signaling scheme, whose construction relies on a parameter termed optimal signal ratio. The constructed scheme provably obtains a good approximation as long as the maximum and minimum of bidders' value density functions do not differ much. 

   more » « less
4. Calibrated Click-Through Auctions

   https://doi.org/10.1145/3485447.3512050  

   Bergemann, Dirk; Dütting, Paul; Paes Leme, Renato; Zuo, Song (April 2022, ACM Web Conference)

   We analyze the optimal information design in a click-through auction with stochastic click-through rates and known valuations per click. The auctioneer takes as given the auction rule of the clickthrough auction, namely the generalized second-price auction. Yet, the auctioneer can design the information flow regarding the clickthrough rates among the bidders. We require that the information structure to be calibrated in the learning sense. With this constraint, the auction needs to rank the ads by a product of the value and a calibrated prediction of the click-through rates. The task of designing an optimal information structure is thus reduced to the task of designing an optimal calibrated prediction. We show that in a symmetric setting with uncertainty about the click-through rates, the optimal information structure attains both social efficiency and surplus extraction. The optimal information structure requires private (rather than public) signals to the bidders. It also requires correlated (rather than independent) signals, even when the underlying uncertainty regarding the click-through rates is independent. Beyond symmetric settings, we show that the optimal information structure requires partial information disclosure, and achieves only partial surplus extraction. 

   more » « less
5. PreferenceNet: Encoding Human Preferences in Auction Design with Deep Learning

   Peri, Neehar; Curry, Michael; Dooley, Samuel; Dickerson, John P (January 2021, Advances in Neural Information Processing Systems 34)

   The design of optimal auctions is a problem of interest in economics, game theory and computer science. Despite decades of effort, strategyproof, revenue-maximizing auction designs are still not known outside of restricted settings. However, recent methods using deep learning have shown some success in approximating optimal auctions, recovering several known solutions and outperforming strong baselines when optimal auctions are not known. In addition to maximizing revenue, auction mechanisms may also seek to encourage socially desirable constraints such as allocation fairness or diversity. However, these philosophical notions neither have standardization nor do they have widely accepted formal definitions. In this paper, we propose PreferenceNet, an extension of existing neural-network-based auction mechanisms to encode constraints using (potentially human-provided) exemplars of desirable allocations. In addition, we introduce a new metric to evaluate an auction allocations' adherence to such socially desirable constraints and demonstrate that our proposed method is competitive with current state-of-the-art neural-network based auction designs. We validate our approach through human subject research and show that we are able to effectively capture real human preferences. 

   more » « less