We propose a new market design for display advertising contracts, based on posted prices. Under certain assumptions, posted prices can lead to global market efficiency, while supporting the dynamic nature of this marketplace. However, a posted prices approach requires overcoming two major challenges: (i) the space of possible impression types is exponential in the number of attributes, which is typically large; therefore a complete price space cannot be maintained. (ii) to ensure stability, prices should clear the market (equate demand and supply). This requires means to elicit demand and supply in a way that is reasonably simple yet sufficiently expressive.
To facilitate elicitation, we employ reasonable structural assumptions on the demand; specifically, that advertisers' utility function exhibits Constant Elasticity of Substitution (CES) and goods are Gross Substitutes, and show how utility functions can be extrapolated by observing advertiser's demand statements in response to current prices. On the price space side, we define a compact set of market goods, each is a statement over a subset of the attributes, based on current demand. We show how to overcome various consistency problems this could cause. We then show how market clearing prices can be computed efficiently. Finally, we discuss the application of this posted prices approach in the dynamic environment of display advertising (joint work with Moshe Tennenholtz).