Motivated by vigorous development of keyword auctions, this paper analyzes the reserve price policies in keyword auction with advertisers’ endogenous investment and risk-averse search engine. We explore advertisers’ optimal investment and equilibrium bidding strategies and derive the determination functions where utility-maximizing reserve price and efficient reserve price which maximizes the social welfare satisfy respectively. The results show that advertisers’ equilibrium bidding is monotonously increasing in bidders’ valuations, the number of advertisers, as well as the reserve price. Meanwhile, advertisers’ optimal investment is negatively correlated with reserve price and the number of advertisers. By numerical examples, the utility-maximizing reserve price decreases with the risk aversion parameter and the number of advertisers. Search engine’s expected utility increases with risk aversion parameter and decreases with the number of advertisers. Moreover, we declare that search engine can use reserve price as a regulatory tool to increase the utility. But there is an upper bound on search engine’s utility. It is interesting to find the efficient reserve price equals to zero. Hence there is a trade-off between total efficiency and search engine’s utility by search engine that has incentive to withhold reserve price that would benefit social welfare.
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DOI : 10.1051/ro/2019103
@article{RO_2021__55_1_231_0,
author = {Yang, Qin and Hong, Xianpei and Wang, Zongjun and Zhang, Huaige},
title = {Reserve price of risk-averse search engine in keyword auctions with advertisers{\textquoteright} endogenous investment},
journal = {RAIRO. Operations Research},
pages = {231--245},
year = {2021},
publisher = {EDP-Sciences},
volume = {55},
number = {1},
doi = {10.1051/ro/2019103},
mrnumber = {4228687},
zbl = {1468.91062},
language = {en},
url = {https://www.numdam.org/articles/10.1051/ro/2019103/}
}
TY - JOUR AU - Yang, Qin AU - Hong, Xianpei AU - Wang, Zongjun AU - Zhang, Huaige TI - Reserve price of risk-averse search engine in keyword auctions with advertisers’ endogenous investment JO - RAIRO. Operations Research PY - 2021 SP - 231 EP - 245 VL - 55 IS - 1 PB - EDP-Sciences UR - https://www.numdam.org/articles/10.1051/ro/2019103/ DO - 10.1051/ro/2019103 LA - en ID - RO_2021__55_1_231_0 ER -
%0 Journal Article %A Yang, Qin %A Hong, Xianpei %A Wang, Zongjun %A Zhang, Huaige %T Reserve price of risk-averse search engine in keyword auctions with advertisers’ endogenous investment %J RAIRO. Operations Research %D 2021 %P 231-245 %V 55 %N 1 %I EDP-Sciences %U https://www.numdam.org/articles/10.1051/ro/2019103/ %R 10.1051/ro/2019103 %G en %F RO_2021__55_1_231_0
Yang, Qin; Hong, Xianpei; Wang, Zongjun; Zhang, Huaige. Reserve price of risk-averse search engine in keyword auctions with advertisers’ endogenous investment. RAIRO. Operations Research, Tome 55 (2021) no. 1, pp. 231-245. doi: 10.1051/ro/2019103
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