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Ad exchange: envy-free auctions with mediators. (English) Zbl 1406.91157
Markakis, Evangelos (ed.) et al., Web and internet economics. 11th international conference, WINE 2015, Amsterdam, The Netherlands, December 9–12, 2015. Proceedings. Berlin: Springer (ISBN 978-3-662-48994-9/pbk; 978-3-662-48995-6/ebook). Lecture Notes in Computer Science 9470, 104-117 (2015).
Summary: Ad exchanges are an emerging platform for trading advertisement slots on the web with billions of dollars revenue per year. Every time a user visits a web page, the publisher of that web page can ask an ad exchange to auction off the ad slots on this page to determine which advertisements are shown at which price. Due to the high volume of traffic, ad networks typically act as mediators for individual advertisers at ad exchanges. If multiple advertisers in an ad network are interested in the ad slots of the same auction, the ad network might use a “local” auction to resell the obtained ad slots among its advertisers.
In this work, we want to deepen the theoretical understanding of these new markets by analyzing them from the viewpoint of combinatorial auctions. Prior work studied mostly single-item auctions, while we allow the advertisers to express richer preferences over multiple items. We develop a game-theoretic model for the entanglement of the central auction at the ad exchange with the local auctions at the ad networks. We consider the incentives of all three involved parties and suggest a three-party competitive equilibrium, an extension of the Walrasian equilibrium that ensures envy-freeness for all participants. We show the existence of a three-party competitive equilibrium and a polynomial-time algorithm to find one for gross-substitute bidder valuations.
For the entire collection see [Zbl 1326.68026].

91B26 Auctions, bargaining, bidding and selling, and other market models
91B50 General equilibrium theory
90B60 Marketing, advertising
Full Text: DOI
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