Omar Besbes

 

Faculty Candidate Omar Besbes [Graduate School of Business, Columbia] 
Title Auctions in the online display advertising chain: a case for transparency
Date & Time Friday, May13, 2016 at 10:30am
Place UCLA Anderson School of Management 
Room D310

 

Abstract
Many sellers use frequent auctions to sell items. In some instances,  buyers can be represented by intermediaries that bid on behalf of more than one buyer in the same auction. Notably, in the real-time online display advertising market, in which advertisers bid for impressions  through demand supply platforms (DSPs), this is more the norm than the exception. In turn, DSPs, when deciding what to bid on behalf of their customers, strategize to maximize the surplus of their customers and may only submit a limited number of bids given the visibility on their valuations and the natural desire  to limit competition on a given item. In this talk, we analyze the implications of the presence of such intermediaries, taking as a benchmark the case in which each intermediary would manage the bidding process of each buyer it represents independently of other buyers.  We first establish that in the presence of DSPs, the optimal mechanism for the seller can be implemented as a second price auction with adjusted reserve, and the intermediaries in turn only submit the highest value of the buyers they represent.  We then show that the presence of intermediaries, as one would expect, always affects negatively the seller. However, we also establish that the presence of intermediaries  leads to a decrease in the social welfare and quite notably,  for a broad range of market characteristics, the buyers (including the intermediaries) are also worse-off.  This research has implications on the role that intermediaries should play in the online display advertising chain.

(joint work with A. Allouah)

Omar Besbes