Consider an auction bidding for the keyword ``Kyoto travel”. $0.01 is the minimum increment in those auctions.
Advertiser A’s max bid is $12.31. Advertiser B’s max bid is $23.22. Advertiser C’s max bid is $21.53. Advertiser D’s max bid is $17.44. Advertiser E’s max bid is $9.98. There are in total three spots for advertisements.
(i) Suppose those bidders bid on Yahoo!, which three bidders win the auction? How much does each of them pay for it? (Yahoo! adopts generalized second-price auction, not click-weighted.)
(ii) Now suppose those bidders bid on Google and calculate expected revenue per search E(RPS) for each advertiser. Which three bidders win the auction? How much does each of them pay for it? (Google adopts click-weighted generalized second-price auction)
Expected click through rate E(CTR) for advertiser A is 0.2.
Expected click through rate E(CTR) for advertiser B is 0.15.
Expected click through rate E(CTR) for advertiser C is 0.1.
Expected click through rate E(CTR) for advertiser D is 0.15.
Expected click through rate E(CTR) for advertiser E is 0.2.