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An auction system for ads results in the most profitable solution winning, not the most valuable. Marginally bidding toward the largest difference between consu
by ndriscoll 2y ago
An auction system for ads results in the most profitable solution winning, not the most valuable. Marginally bidding toward the largest difference between consumer price and input cost is a bad thing; that's the least efficient solution, and means you are maximally overpaying for value received. An ideal search would find products with the smallest difference between price and input cost, i.e. items near the Pareto frontier.
For a more distilled scenario, if you manually accepted open stock trade offers, and your broker took kickbacks to always show you the worst bids/asks that they think you might fall for and make it difficult to find the best quotes, that would obviously be bad. In fact not providing best execution is illegal. The ad economy runs on exactly this conflict of interest. Money flowing through ads represents inflated transaction costs.