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Incentivizing Advertiser Networks to Submit Multiple Bids

Patrick Hummel
R. Preston McAfee
International Journal of Game Theory, vol. 45 (2016), pp. 1031-1052


This paper illustrates a method for making side payments to advertiser networks that creates an incentive for the advertiser networks to submit the second-highest bids they received to an ad exchange and simultaneously ensures that the publishers will make more money on average in the short run as a result of adopting this scheme. We also illustrate how this payment scheme affects publisher payoffs in the long run after advertisers have a chance to modify their strategies in response to the changed incentives of the mechanism.