Databases Reference
In-Depth Information
Potpourri
: Although there is no evidence of when the first auction occurred, there
are records of auctions as far back as 500 BC in Greece. At that time, women were
auctioned off as wives, with auctions being the only “official” method for a father
to sell a daughter.
In Roman times, the buyer in the auction was known as the emptor, leading to
the phrase many know, caveat emptor, or
buyer beware
.
The first online auction business appears to be the Japanese company Aucnet,
which sold automobiles online. Aucnet was closely followed by Onsale in May
1995 and eBay in September 1995 [
2
].
GoTo.com - later Overture - opened their sponsored-search auction in 1998,
with Google opening their version in 2000. Microsoft entered the sponsored-
search auction business in 2006 [
3
]. Yahoo!, which had purchased Overture in
2003, introduced a revamped sponsored-search auction in 2007. Baidu modeled
both the Google auction and presentation in 2009.
The auction process or platform, typically called a market, takes some set of
resources and allocates these resources to those participating in the auction based on
a pricing mechanism known as a bid. Therefore, an auction is simply a market with
an explicit set of rules to determine resource allocation. The prices of these resources
are based on bids from the participants in that market [
4
].
For sponsored search, the search engines are the
market
as the keyphrase bidding
platform where advertisers (virtually) gather. The resource is the
ad positions
, which
is the SERP real estate for ad placement. The participants are the
advertisers
. The
prices of SERP real estate and placement are determined by the
bids
on keyphrases
that link searcher queries to the advertisements.
In principle, online auctions are not much different than the auctions that one may
see at a county fair in the United States, an estate sale, or at some high-priced auction
house, such as Sotheby's or Christie's. These are usually standard auctions, where the
resource goes to the participant that placed the highest bid.
Potpourri
: Most auction research is based on game theory, which attempts to
mathematically model player situations, actions, and strategies in games. In most
games, one's success often depends on the acts of others.
Game theory research is often based on having perfect information.
In a game with perfect information, all players know all actions that have taken
place (e.g., chess, checkers).
Other types of games have imperfect information (e.g., most card games).
The assumption of perfect or imperfect information, although a simple con-
cept, has a great effect on any analysis of a game, market, or auction.
Although some auction academics use perfect information (it makes analysis
earlier), for practical cases, it is best to assume an auction where information
is imperfect [
5
]. That is, the bidders do not know all the actions of the other
bidders.
(
Continued
)
