Istituto di Informatica e Telematica     
Budinich M. Quality Scores in Sponsored Search. Technical report, 2011.
In sponsored search auctions (SSA) advertisers bid on particular keywords for the oppor- tunity to display their ad besides the search results for the corresponding query. The amount of information on the details of these auctions is limited. Most of the scientific literature has focused on a simplified model, that nonetheless appears to explain many of the observed behaviors of these markets. However one fundamental feature is missing from these models: the ability of the search engine to directly affect the rankings of the ads. The main tool search engines have to do this are quality scores (QS), which have already been considered in the current models, albeit in a limited way. In this paper we extend the model to include quality scores that are independent of other properties of the auction, and show how this modifies the theoretical properties of the market. Finally we also consider a scarcely studied cooperative behavior, in which a group of bidders collude (forming a so called ring) to decrease their overall payment and share the profits. We show that, in the sponsored search setting, rings are not always profitable, and consider the effect of quality scores in this scenario.
Subject Sponsored Search Auctions
Quality Scores
Bidding Rings
J.4 [Social and Behavioral Sciences]: Economics

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