This paper studies equilibrium selection in the generalized second price auction, employed by major search engines to sell online advertisement positions. We perturb the baseline model by introducing a bidder whose bid and participation are random (noise bidder). In this model, an efficient...

We propose a novel approach to the modelling of second-price Maximum-Value auctions that assumes no belief about others' behavior and no expected profit maximization. This individual decision-making model, naïve Impulse Balance Equilibrium or nIBE, deals with bidders' anticipated regrets from...