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Gsp does NOT have this dominant strategy property! People think it does which ironically makes it much better at “extracting value.” non repeated second price a
by andrewyates2020 5y ago
Gsp does NOT have this dominant strategy property! People think it does which ironically makes it much better at “extracting value.” non repeated second price auction has this property. Gsp will almost always overprice just like fpa except in very unrealistic situations
- disgruntledphd2 5y agoSo, in a FPA I bid $1. I win, and pay $1. In a GSP, I bid $1. I'll pay the second price (not really but for purposes of clarity assume it) which was $0.90. In this case, I always (almost) pay less than my maximum bid, which allows for margin given to me (assuming true value and a bunch of other unrealistic things) rather than in the FPA, where I pay $1, assuming my bid is highest. I'm not talking in incentive-compatibility terms, rather in terms of where the "margin" goes.
- andrewyates2020 5y agoIn FPA, you need to strategically lower your bid to get "margin." In GSP, that's also true. I have some details here: https://medium.com/promoted/when-goog-fb-is-bad-for-your-performance-ads-business-part-2-8831cdc1b84b https://medium.com/promoted/when-goog-fb-is-bad-for-your-per...