Pure and Bayes-Nash Price of Anarchy for Generalized Second Price Auction

Generalized Second Price Auction, also knows as Ad Word auctions, and its variants has been the main mechanism used by search companies to auction positions for sponsored search links. In this paper we study the social welfare of the Nash equilibria of this game. It is known that socially optimal Nash equilibria exists (i.e., that the Price of Stability for this game is 1). This paper is the first to prove bounds on the price of anarchy. Our main result is to show that under some mild assumptions the price of anarchy is small. For pure

• Type: Journal
• Year: 2010
• Where: FOCS
• Authors: Renato Paes Leme, Éva Tardos
• Keywords: FOCS 2010, Main Mechanism, Nash Equilibria, Second Price Auction, Theoretical Computer Science