Impact of Information on Different Parties in the Market of Internet Advertising Auction Under the Mechanism of Generalized Second-Price Auction
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Impact of Information on Different Parties in the Market of Internet Advertising Auction Under the Mechanism of Generalized Second-Price Auction

Haoran Mao 1* Zihao Yan 2
1 School of Qingdao Academy
2 School of Qingdao Academy
*Corresponding author: Victor.mao08@outlook.com
Published on 16 September 2025
Journal Cover
AEMPS Vol.217
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-363-5
ISBN (Online): 978-1-80590-364-2
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Abstract

This paper investigates the influence of different levels of information provision on advertisement bidders and search engines that own the advertisement places under a generalized second price auction mechanism. Three settings of the level of information are given: no information, incomplete information, and complete information. The study examines specific categories of data collected from the experiment: total profit, individual profit, individual revenue, total revenue for the search engine, and others. With statistical analysis and ANOVA tests, it can be found that increasing the availability of information to consumers would increase their actual payments, thus decreasing their profits and total profits while increasing the total revenue for the search engine. This paper provides a deep understanding of the effects of information on bidders and search engines, giving practical advice to both sides in bidding for advertisement places.

Keywords:

generalized second-price auction, information, experiment, search engine, advertiser, revenue

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Mao,H.;Yan,Z. (2025). Impact of Information on Different Parties in the Market of Internet Advertising Auction Under the Mechanism of Generalized Second-Price Auction. Advances in Economics, Management and Political Sciences,217,21-31.

References

[1]. Varian, H. R. (2007). Position auctions. International Journal of Industrial Organization, 25(6), 1163-1178. https: //doi.org/10.1016/j.ijindorg.2006.10.003

[2]. Delnoij, J. J. M., & De Jaegher, K. (2020). Auction selection in markets with risk-averse bidders: First-price versus second-price auctions. Economic Inquiry, 58(1), 145-160. https: //doi.org/10.1111/ecin.12787

[3]. Edelman, B., & Ostrovsky, M. (2007). Strategic bidder behavior in sponsored search auctions. Management Science, 53(2), 223-240. https: //doi.org/10.1287/mnsc.1060.0619

[4]. Edelman, B., Ostrovsky, M., & Schwarz, M. (2005). Internet advertising and the generalized second-price auction: Selling billions of dollars worth of keywords. American Economic Review, 97(1), 242-259. https: //doi.org/10.1257/aer.97.1.242

[5]. Edelman, B., & Schwarz, M. (2010). Optimal auction design and equilibrium selection in sponsored search auctions. American Economic Journal: Microeconomics, 2(1), 1-23. https: //doi.org/10.1257/mic.2.1.1

[6]. List, J. A., & Shogren, J. F. (1999). Price information and bidding behavior in repeated auctions. American Economic Review, 89(3), 473-492. https: //doi.org/10.1257/aer.89.3.473

[7]. Smith, A., Johnson, K., & Brown, L. (2017). The relevance of ads to consumers and its impact on advertising revenue. Journal of Marketing Research, 54(4), 612-630. https: //doi.org/10.1509/jmr.16.0102

[8]. Kasberger, B., List, J. A., & Shogren, J. F. (2015). The impact of incomplete information in auctions: Evidence from a field experiment. Experimental Economics, 18(1), 91-115. https: //doi.org/10.1007/s10683-014-9407-7

[9]. Amaldoss, W., Desai, P. S., & Shin, W. (2015). Keyword search advertising and first-page bid estimates. Journal of Marketing Research, 52(3), 329-345. https: //doi.org/10.1509/jmr.13.0490

[10]. Cristián Troncoso-Valverde, C. (2017). Information release in second-price auctions with private values. Journal of Economic Behavior & Organization, 134, 69-82. https: //doi.org/10.1016/j.jebo.2016.12.012

[11]. Li, T., & Shi, X. (2017). Selective information disclosure in auctions. Journal of Economic Theory, 170, 245-273. https: //doi.org/10.1016/j.jet.2017.06.003

[12]. Kagel, J. H., & Levin, D. (2004). Common value auctions and the winner’s curse. Princeton University Press.

[13]. Gershkov, A. (2009). Information disclosure in auctions: A model of private-value second-price auctions. Economic Theory, 40(3), 381-404. https: //doi.org/10.1007/s00199-008-0356-4

[14]. Eliaz, K., Kfir, R., & Spiegler, R. (2011). Search engines and advertisement pricing: Incentives, repercussions, and consumer impact.

References

[1]. Varian, H. R. (2007). Position auctions. International Journal of Industrial Organization, 25(6), 1163-1178. https: //doi.org/10.1016/j.ijindorg.2006.10.003

[2]. Delnoij, J. J. M., & De Jaegher, K. (2020). Auction selection in markets with risk-averse bidders: First-price versus second-price auctions. Economic Inquiry, 58(1), 145-160. https: //doi.org/10.1111/ecin.12787

[3]. Edelman, B., & Ostrovsky, M. (2007). Strategic bidder behavior in sponsored search auctions. Management Science, 53(2), 223-240. https: //doi.org/10.1287/mnsc.1060.0619

[4]. Edelman, B., Ostrovsky, M., & Schwarz, M. (2005). Internet advertising and the generalized second-price auction: Selling billions of dollars worth of keywords. American Economic Review, 97(1), 242-259. https: //doi.org/10.1257/aer.97.1.242

[5]. Edelman, B., & Schwarz, M. (2010). Optimal auction design and equilibrium selection in sponsored search auctions. American Economic Journal: Microeconomics, 2(1), 1-23. https: //doi.org/10.1257/mic.2.1.1

[6]. List, J. A., & Shogren, J. F. (1999). Price information and bidding behavior in repeated auctions. American Economic Review, 89(3), 473-492. https: //doi.org/10.1257/aer.89.3.473

[7]. Smith, A., Johnson, K., & Brown, L. (2017). The relevance of ads to consumers and its impact on advertising revenue. Journal of Marketing Research, 54(4), 612-630. https: //doi.org/10.1509/jmr.16.0102

[8]. Kasberger, B., List, J. A., & Shogren, J. F. (2015). The impact of incomplete information in auctions: Evidence from a field experiment. Experimental Economics, 18(1), 91-115. https: //doi.org/10.1007/s10683-014-9407-7

[9]. Amaldoss, W., Desai, P. S., & Shin, W. (2015). Keyword search advertising and first-page bid estimates. Journal of Marketing Research, 52(3), 329-345. https: //doi.org/10.1509/jmr.13.0490

[10]. Cristián Troncoso-Valverde, C. (2017). Information release in second-price auctions with private values. Journal of Economic Behavior & Organization, 134, 69-82. https: //doi.org/10.1016/j.jebo.2016.12.012

[11]. Li, T., & Shi, X. (2017). Selective information disclosure in auctions. Journal of Economic Theory, 170, 245-273. https: //doi.org/10.1016/j.jet.2017.06.003

[12]. Kagel, J. H., & Levin, D. (2004). Common value auctions and the winner’s curse. Princeton University Press.

[13]. Gershkov, A. (2009). Information disclosure in auctions: A model of private-value second-price auctions. Economic Theory, 40(3), 381-404. https: //doi.org/10.1007/s00199-008-0356-4

[14]. Eliaz, K., Kfir, R., & Spiegler, R. (2011). Search engines and advertisement pricing: Incentives, repercussions, and consumer impact.

Cite this article

Mao,H.;Yan,Z. (2025). Impact of Information on Different Parties in the Market of Internet Advertising Auction Under the Mechanism of Generalized Second-Price Auction. Advances in Economics, Management and Political Sciences,217,21-31.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

About volume

Volume title: Proceedings of the 4th International Conference on Financial Technology and Business Analysis

ISBN: 978-1-80590-363-5(Print) / 978-1-80590-364-2(Online)
Editor: Lukáš Vartiak
Conference website: https://2025.icftba.org/
Conference date: 12 December 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.217
ISSN: 2754-1169(Print) / 2754-1177(Online)

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