A "Position Paradox" in Sponsored Search Auctions

@article{Jerath2011AP,
  title={A "Position Paradox" in Sponsored Search Auctions},
  author={Kinshuk Jerath and Liye Ma and Young-Hoon Park and Kannan Srinivasan},
  journal={Marketing Science},
  year={2011},
  volume={30},
  pages={612-627}
}
W study the bidding strategies of vertically differentiated firms that bid for sponsored search advertisement positions for a keyword at a search engine. We explicitly model how consumers navigate and click on sponsored links based on their knowledge and beliefs about firm qualities. Our model yields several interesting insights; a main counterintuitive result we focus on is the “position paradox.” The paradox is that a superior firm may bid lower than an inferior firm and obtain a position… CONTINUE READING
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