AI

Position Auctions with Dynamic Resizing

Abstract

This paper analyzes mechanisms for selling advertising inventory in a position auction in which displaying less than the maximal number of ads means the ads that are shown can be dynamically resized and displayed more prominently. I characterize the optimal mechanism with and without dynamic resizing, and illustrate how the optimal reserve prices in a Vickrey–Clarke–Groves mechanism vary with the amount of dynamic resizing and the number of bidders.