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Doesn't Google uses Vickrey auctions (http://en.wikipedia.org/wiki/Vickrey_auction http://en.wikipedia.org/wiki/Vickrey_auction) just to avoid this? I recall an
by zzleeper 16y ago
Doesn't Google uses Vickrey auctions (http://en.wikipedia.org/wiki/Vickrey_auction http://en.wikipedia.org/wiki/Vickrey_auction) just to avoid this? I recall an article by Hal Varian some time ago about this..
- redwood 16y agoyup
- gojomo 16y agoThe Vickrey/second-price auction helps a sealed bid auction behave more like an iterative escalating bid auction, and helps encourage bidders to reveal their true reserve value. But, it does not directly address the "winner's curse", which is that whatever the auction mechanism, the winning bidder(s) are especially likely to be those who have overestimated the value of the item at auction (even if paying the next-highest-overestimator's bid).
- zzleeper 16y agoThat makes sense.. however winner's curse is more relevant when you have common value auctions (eg: bidding for something with an unknown value that is the same for everyone). However, in advertisement everyone has a different value derived from the ads, and also since you advertise every day, winner's curse is less likely (you learn). =)