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正在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每购一个目标成本-每购一个似乎最优化的投标(tCPA),这是在投资回报限制下最大限度地增加转换的数量。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该基准结果的基础性结果背道而驰,这种基础性结果假设的是利润最大化投标人,因此最好使用一种典型的投标系统,如边际CPA(mCPA)招标,而不是像 tCPA那样采用可信的战略。在本文中,我们合理使用这种看起来最优化的市价竞标(top-opal-cal-capet-cral-ral-ral-ral-ral-ral-ral-ral-lation-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l)-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-</s>
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