An Optimal Mechanism for Sponsored Search Auctions on the Web and Comparison With Other Mechanisms

In this paper, we first describe a framework to model the sponsored search auction on the web as a mechanism design problem. Using this framework, we describe two well-known mechanisms for sponsored search auction-Generalized Second Price (GSP) and Vickrey-Clarke-Groves (VCG). We then derive a new mechanism for sponsored search auction which we call optimal (OPT) mechanism. The OPT mechanism maximizes the search engine's expected revenue, while achieving Bayesian incentive compatibility and individual rationality of the advertisers. We then undertake a detailed comparative study of the mechanisms GSP, VCG, and OPT. We compute and compare the expected revenue earned by the search engine under the three mechanisms when the advertisers are symmetric and some special conditions are satisfied. We also compare the three mechanisms in terms of incentive compatibility, individual rationality, and computational complexity. Note to Practitioners-The advertiser-supported web site is one of the successful business models in the emerging web landscape. When an Internet user enters a keyword (i.e., a search phrase) into a search engine, the user gets back a page with results, containing the links most relevant to the query and also sponsored links, (also called paid advertisement links). When a sponsored link is clicked, the user is directed to the corresponding advertiser's web page. The advertiser pays the search engine in some appropriate manner for sending the user to its web page. Against every search performed by any user on any keyword, the search engine faces the problem of matching a set of advertisers to the sponsored slots. In addition, the search engine also needs to decide on a price to be charged to each advertiser. Due to increasing demands for Internet advertising space, most search engines currently use auction mechanisms for this purpose. These are called sponsored search auctions. A significant percentage of the revenue of Internet giants such as Google, Yahoo!, MSN, etc., comes from sponsored search auctions. In this paper, we study two auction mechanisms, GSP and VCG, which are quite popular in the sponsored auction context, and pursue the objective of designing a mechanism that is superior to these two mechanisms. In particular, we propose a new mechanism which we call the OPT mechanism. This mechanism maximizes the search engine's expected revenue subject to achieving Bayesian incentive compatibility and individual rationality. Bayesian incentive compatibility guarantees that it is optimal for each advertiser to bid his/her true value provided that all other agents also bid their respective true values. Individual rationality ensures that the agents participate voluntarily in the auction since they are assured of gaining a non-negative payoff by doing so.

A Tutorial on Integrating CDS/ISIS Databases with the World Wide Web

With the emergence of Internet, the global connectivity of computers has become a reality. Internet has progressed to provide many user-friendly tools like Gopher, WAIS, WWW etc. for information publishing and access. The WWW, which integrates all other access tools, also provides a very convenient means for publishing and accessing multimedia and hypertext linked documents stored in computers spread across the world. With the emergence of WWW technology, most of the information activities are becoming Web-centric. Once the information is published on the Web, a user can access this information from any part of the world. A Web browser like Netscape or Internet Explorer is used as a common user interface for accessing information/databases. This will greatly relieve a user from learning the search syntax of individual information systems. Libraries are taking advantage of these developments to provide access to their resources on the Web. CDS/ISIS is a very popular bibliographic information management software used in India. In this tutorial we present details of integrating CDS/ISIS with the WWW. A number of tools are now available for making CDS/ISIS database accessible on the Internet/Web. Some of these are 1) the WAIS_ISIS Server. 2) the WWWISIS Server 3) the IQUERY Server. In this tutorial, we have explained in detail the steps involved in providing Web access to an existing CDS/ISIS database using the freely available software, WWWISIS. This software is developed, maintained and distributed by BIREME, the Latin American & Caribbean Centre on Health Sciences Information. WWWISIS acts as a server for CDS/ISIS databases in a WWW client/server environment. It supports functions for searching, formatting and data entry operations over CDS/ISIS databases. WWWISIS is available for various operating systems. We have tested this software on Windows '95, Windows NT and Red Hat Linux release 5.2 (Appolo) Kernel 2. 0. 36 on an i686. The testing was carried out using IISc's main library's OPAC containing more than 80,000 records and Current Contents issues (bibliographic data) containing more than 25,000 records. WWWISIS is fully compatible with CDS/ISIS 3.07 file structure. However, on a system running Unix or its variant, there is no guarantee of this compatibility. It is therefore safe to recreate the master and the inverted files, using utilities provided by BIREME, under Unix environment.