Adverse Selection And Auction Design For Internet Display Advertising

Nick Arnosti, Marissa Beck, Paul Milgrom

Research output: Contribution to journalArticlepeer-review


We model an online display advertising environment with brand advertisers and better-informed performance advertisers, and seek an auction mechanism that is strategy-proof, anonymous and insulates brand advertisers from adverse selection. We Find that the only such mechanism that is also false-name proof assigns the item to the highest bidding performance advertiser only when the ratio of the highest bid to the second highest bid is suffciently large. For fat-tailed match-value distributions, this new mechanism captures most of the gains from good matching and improves match values substantially compared to the common practice of setting aside impressions in advance.

Original languageEnglish (US)
JournalEAI Endorsed Transactions on Scalable Information Systems
Issue number11
StatePublished - 2016
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2015 ICST.


  • Adverse Selection
  • Auctions
  • Market Design


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