GNM2013: Posted Prices Exchange for Display Advertising Contracts

We propose a new market design for display advertising contracts, based on posted prices. Our model and algorithmic framework address several 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) advertisers are usually unable or reluctant to provide extensive demand (willingness-to-pay) functions, (iii) the levels of detail with which supply and demand are specified are often not identical. We propose a price space over compact set of market goods, each is a statement over a subset of the attributes. This implies a complex relationship between the way goods are represented in the market, and the goods on which players’ utility functions are defined. We propose a market that supports this model, and prove that under reasonable assumptions on advertisers’ utility equilibrium prices exist and can be computed in polynomial time. To facilitate elicitation, we show how utility functions can be extrapolated by observing advertiser’s demand statements in response to current prices. Joint work with Moshe Tennenholtz.