Information Rules: A Strategic Guide to the Network Economy
Information Rules: A Strategic Guide to the Network Economy
FOCS '02 Proceedings of the 43rd Symposium on Foundations of Computer Science
The Price of Stability for Network Design with Fair Cost Allocation
FOCS '04 Proceedings of the 45th Annual IEEE Symposium on Foundations of Computer Science
The Market Structure for Internet Search Engines
Journal of Management Information Systems
A Cascade Model for Externalities in Sponsored Search
WINE '08 Proceedings of the 4th International Workshop on Internet and Network Economics
Sponsored Search Auctions with Markovian Users
WINE '08 Proceedings of the 4th International Workshop on Internet and Network Economics
Intrinsic robustness of the price of anarchy
Proceedings of the forty-first annual ACM symposium on Theory of computing
STACS'99 Proceedings of the 16th annual conference on Theoretical aspects of computer science
Mathematical modeling of competition in sponsored search market
Proceedings of the 2010 Workshop on Economics of Networks, Systems, and Computation
Proceedings of the forty-third annual ACM symposium on Theory of computing
Mechanisms for (mis)allocating scientific credit
Proceedings of the forty-third annual ACM symposium on Theory of computing
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We present a model of competition between web search algorithms, and study the impact of such competition on user welfare. In our model, search providers compete for customers by strategically selecting which search results to display in response to user queries. Customers, in turn, have private preferences over search results and will tend to use search engines that are more likely to display pages satisfying their demands. Our main question is whether competition between search engines increases the overall welfare of the users (i.e., the likelihood that a user finds a page of interest). When search engines derive utility only from customers to whom they show relevant results, we show that they differentiate their results, and every equilibrium of the resulting game achieves at least half of the welfare that could be obtained by a social planner. This bound also applies whenever the likelihood of selecting a given engine is a convex function of the probability that a user's demand will be satisfied, which includes natural Markovian models of user behavior. On the other hand, when search engines derive utility from all customers (independent of search result relevance) and the customer demand functions are not convex, there are instances in which the (unique) equilibrium involves no differentiation between engines and a high degree of randomness in search results. This can degrade social welfare by a factor of Ω(√{NUMPAGES}) relative to the social optimum, where NUMPAGES is the number of webpages. These bad equilibria persist even when search engines can extract only small (but non-zero) expected revenue from dissatisfied users, and much higher revenue from satisfied ones.