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Sponsored search, market equilibria, and the Hungarian Method

Dütting, Paul, Henzinger, Monika and Weber, Ingmar (2013) Sponsored search, market equilibria, and the Hungarian Method. Information Processing Letters, 113 (3). pp. 67-73. ISSN 0020-0190

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Identification Number: 10.1016/j.ipl.2012.11.006

Abstract

Matching markets play a prominent role in economic theory. A prime example of such a market is the sponsored search market. Here, as in other markets of that kind, market equilibria correspond to feasible, envy free, and bidder optimal outcomes. For settings without budgets such an outcome always exists and can be computed in polynomial-time by the so-called Hungarian Method. Moreover, every mechanism that computes such an outcome is incentive compatible. We show that the Hungarian Method can be modified so that it finds a feasible, envy free, and bidder optimal outcome for settings with budgets. We also show that in settings with budgets no mechanism that computes such an outcome can be incentive compatible for all inputs. For inputs in general position, however, the presented mechanism—as any other mechanism that computes such an outcome for settings with budgets—is incentive compatible.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/00200...
Additional Information: © 2013 Elsevier
Divisions: Mathematics
Subjects: Q Science > QA Mathematics > QA75 Electronic computers. Computer science
Sets: Departments > Mathematics
Date Deposited: 15 Nov 2017 17:02
Last Modified: 20 Mar 2019 02:18
URI: http://eprints.lse.ac.uk/id/eprint/85553

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