Optimal Auction Design And Equilibrium Selection In Sponsored Search Auctions

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In analyses of sponsored search auctions for online advertising, it is customary to model the dynamic game of incomplete information by considering a static games of complete information. In this paper, the authors consider a dynamic game of incomplete information used to sell sponsored search advertisements. They also consider a corresponding static game of complete information. The analysis of reserve prices also lets assess their welfare effects. They separate the effects of reserve price increases into direct effects and indirect effects.