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Refereed Papers


Track: Internet Monetization: Online Advertising

Paper Title:
Dynamic Cost-Per-Action Mechanisms and Applications to Online Advertising

Authors:

  • Hamid Nazerzadeh(Stanford University)
  • Amin Saberi(Stanford University)
  • Rakesh Vohra(Northwestern University)

Abstract:
We study the Cost-Per-Action or Cost-Per-Acquisition (CPA) charging scheme in online advertising. In this scheme, instead of paying per click, the advertisers pay only when a user takes a specific action(e.g. fills out a form) or completes a transaction on their websites. We focus on designing efficient and incentive compatible mechanisms that use this charging scheme. We describe a mechanism based on a sampling-based learning algorithm that under suitable assumptions is asymptotically individually rational, asymptotically Bayesian incentive compatible and asymptotically ex-ante efficient. In particular, we demonstrate our mechanism for the case where the utility functions of the advertisers are independent and identically-distributed random variables as well as the case where they evolve like independent reflected Brownian motions.

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