Advertisers in online ad auctions are increasingly using auto-bidding mechanisms to bid into auctions instead of directly bidding their value manually. One prominent auto-bidding format is the target cost-per-acquisition (tCPA) which maximizes the volume of conversions subject to a return-of-investment constraint. From an auction theoretic perspective however, this trend seems to go against foundational results that postulate that for profit-maximizing bidders, it is optimal to use a classic bidding system like marginal CPA (mCPA) bidding rather than using strategies like tCPA. In this paper we rationalize the adoption of such seemingly sub-optimal bidding within the canonical quasi-linear framework. The crux of the argument lies in the notion of *commitment*. We consider a multi-stage game where first the auctioneer declares the auction rules; then bidders select either the tCPA or mCPA bidding format and then, if the auctioneer lacks commitment, it can revisit the rules of the auction (e.g., may readjust reserve prices depending on the observed bids). Our main result is that so long as a bidder believes that the auctioneer lacks commitment to follow the rule of the declared auction then the bidder will make a higher profit by choosing the tCPA format over the mCPA format. We then explore the commitment consequences for the auctioneer. In a simplified version of the model where there is only one bidder, we show that the tCPA subgame admits a *credible* equilibrium while the mCPA format does not. That is, when the bidder chooses the tCPA format the auctioneer can credibly implement the auction rules announced at the beginning of the game. We also show that, under some mild conditions, the auctioneer's revenue is larger when the bidder uses the tCPA format rather than mCPA. We further quantify the value for the auctioneer to be able to commit to the declared auction rules.
翻译:在线广告拍卖中的广告商越来越多地使用自动招标机制进行拍卖,而不是直接手工招标。一个突出的自动招标格式是目标成本-每收购(tCPA),它使转换量在投资回报限制下最大化。然而,从拍卖理论的角度看,这一趋势似乎与假定利润最大化投标人采用MCPA或MCPA投标格式的基础性结果相悖,最好使用像边际CPA(mCPA)投标那样的经典投标制度,而不是使用像 tCPA这样的战略。在本文中,我们合理安排采用这种看似亚优的亚价-每收购(tCPA)模式。在罐头半线性框架中,这种成本-市价A(tCP)是目标-成本最大。我们考虑的是多阶段性游戏,拍卖人首先宣布拍卖规则,然后选择MCPA或MCPA(mCPA)投标模式,然后我们只能对拍卖商没有承诺,这样可以重新审视拍卖规则(eCPC)的报价取决于所观察到的标定的价价格。我们的主要结果是,在标定的低价AA(ral)之后, 开始采用一种承诺。