The Generalized Second Price (GSP) auction has appealing properties
\nwhen ads are simple (text based and identical in size), but
\ndoes not generalize to richer ad settings, whereas truthful mechanisms
\nsuch as VCG do. However, a straight switch from GSP to
\nVCG incurs significant revenue loss for the search engine. We introduce
\na transitional mechanism which encourages advertisers to
\nupdate their bids to their valuations, while mitigating revenue loss.
\nIn this setting, it is easier to propose first a payment function rather
\nthan an allocation function, so we give a general framework which
\nguarantees incentive compatibility by requiring that the payment
\nfunctions satisfy two specific properties. Finally, we analyze the
\nrevenue impacts of our mechanism on a sample of Bing data.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Generalized Second Price (GSP) auction has appealing properties when ads are simple (text based and identical in size), but does not generalize to richer ad settings, whereas truthful mechanisms such as VCG do. However, a straight switch from GSP to VCG incurs significant revenue loss for the search engine. 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