Re:Launch HN: Promoted (YC W21) - Search and feed ranking fo...
by andrewyates2020 on Tuesday November 02, 2021 @11:30AM
(#29082727)
Gsp does NOT have this dominant strategy property! People think it does which ironically makes it much better at “extracting value.” non repeated second price auction has this property. Gsp will almost always overprice just like fpa except in very unrealistic situations
Re:Launch HN: Promoted (YC W21) - Search and feed ranking fo...
by disgruntledphd2 on Tuesday November 02, 2021 @11:48AM
(#29083011)
So, in a FPA I bid $1. I win, and pay $1.
In a GSP, I bid $1. I'll pay the second price (not really but for purposes of clarity assume it) which was $0.90.
In this case, I always (almost) pay less than my maximum bid, which allows for margin given to me (assuming true value and a bunch of other unrealistic things) rather than in the FPA, where I pay $1, assuming my bid is highest.
I'm not talking in incentive-compatibility terms, rather in terms of where the "margin" goes.
Re:Launch HN: Promoted (YC W21) - Search and feed ranking fo...
by andrewyates2020 on Tuesday November 02, 2021 @12:14PM
(#29083358)
In FPA, you need to strategically lower your bid to get "margin." In GSP, that's also true. I have some details here:
https://medium.com/promoted/when-goog-fb-is-bad-for-your-per...
Like, the trouble with FPA is that it extracts "too much" money from the bidder, as they pay their marginal cost. GSP (second price more generally) does have the nice property that you'll always pay less than your maximum bid, which is the margin (assuming you're bidding your maximum profitable LTV).
Also, congratulations Andrew, I'm sure you guys are gonna do incredibly well (and if you have problems in this space, I strongly recommend giving promoted.ai a look).