Position auctions were widely used by search engines to sell keyword advertising before
being well understood (and, indeed, studied) theoretically. To date, theorists have made
significant progress, for example showing that a given auction is efficient or revenue-
dominates a benchmark auction such as VCG. This paper augments that line of work, relying
on computational equilibrium analysis. By computing Nash equilibria and calculating their
expected revenue and social welfare, we can quantitatively answer questions that …

… Analyzing Position Auctions as Games Most existing literature analyzes position auctions
as unrepeated, perfect-information interactions unrepeated: probability one user will click
on an ad is independent of the probability for the next user perfect info: bidders can probe
each others’ values Given a valuation model for each advertiser and a fixed number of bid
increments, we have a big normal-form game. … Most existing literature analyzes position
auctions as unrepeated, perfect-information interactions unrepeated: probability one user …