Strategic bidder behavior in sponsored search auctions
Decision Support Systems
Designing online auctions with past performance information
Decision Support Systems
INFORMS Journal on Computing
Dynamic price competition on the internet: advertising auctions
Proceedings of the 8th ACM conference on Electronic commerce
Marketing Science
Ex Ante Information and the Design of Keyword Auctions
Information Systems Research
The Race for Sponsored Links: Bidding Patterns for Search Advertising
Marketing Science
Empirical price modeling for sponsored search
WINE'07 Proceedings of the 3rd international conference on Internet and network economics
Search Engine Advertising: Channel Substitution When Pricing Ads to Context
Management Science
Empirical analysis of predictive algorithms for collaborative filtering
UAI'98 Proceedings of the Fourteenth conference on Uncertainty in artificial intelligence
Effects of the Presence of Organic Listing in Search Advertising
Information Systems Research
Optimal keyword auctions for optimal user experiences
Decision Support Systems
Bidding behaviors for a keyword auction in a sealed-bid environment
Decision Support Systems
Dynamic dual adjustment of daily budgets and bids in sponsored search auctions
Decision Support Systems
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Keyword advertising, or sponsored search, is one of the most successful advertising models on the Internet. One distinctive feature of keyword auctions is that they enable advertisers to adjust their bids and rankings dynamically, and the payoffs are realized in real time. We capture this unique feature with a dynamic model and identify an equilibrium bidding strategy. We find that under certain conditions, advertisers may engage in cyclical bid adjustments, and equilibrium bidding prices may follow a cyclical pattern: price-escalating phases interrupted by price-collapsing phases, similar to an “Edgeworth cycle” in the context of dynamic price competitions. Such cyclical bidding patterns can take place in both first-and second-price auctions. We obtain two data sets containing detailed bidding records of all advertisers for a sample of keywords in two leading search engines. Our empirical framework, based on a Markov switching regression model, suggests the existence of such cyclical bidding strategies. The cyclical bid-updating behavior we find cannot be easily explained with static models. This paper emphasizes the importance of adopting a dynamic perspective in studying equilibrium outcomes of keyword auctions. This paper was accepted by Pradeep Chintagunta and Preyas Desai, special issue editors. This paper was accepted by Pradeep Chintagunta and Preyas Desai, special issue editors.