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"Many advertisers suspect that the bidding is rigged and they’re paying more for that ad than they should.
They may be right. In a new paper, Mohammad Akbarpour at Stanford Graduate School of Business and Shengwu Li at Harvard University confirm that the most common format of auctions for online ads do indeed give auctioneers ample opportunity to cheat. That can undermine the auctions themselves, if bidders become so skeptical that they stay away." from Rigged Auctions? Why Top Bidders Don’t Always Feel Like Winners by Edmund L. Andrews:
"The controversy turns on what are called “second-price” auctions, which have been hailed as a great way to make the bidding simpler and less risky. In contrast to an old-fashioned “first-price” auction, where the top bidder pays exactly what he or she offered, the winner in a second-price auction only pays as much as the runner-up bidder had offered. ... only the auctioneers know for certain what the second-highest bid was. If the top bid for placing an insurance ad was $60 per click, and the second-highest was $45, the auctioneer could plausibly claim that the second-highest bid was $55 and pocket the difference. If the bids are all sealed, who would know?"
Aug 28, 2018, 12:42:05 PM
Posted to Has Web Advertising Jumped The Shark?