Fairness and Efficiency in Online Advertising Mechanisms

Abstract

Online advertising often involves targeting ads to certain types of consumers where ads are commonly sold by generalized second price auctions. However, such an auction or mechanism could be considered unfair if similar consumers are consistently shown different ads or consistently receive different payoffs. Results show that such ascending bid auctions may result in unfair treatment and additionally that uncertainty regarding an ad’s value can result in inefficiency. An alternative way to assign ads to consumers is presented called the random assignment mechanism. Results show that the random assignment can improve fairness while improving efficiency in some circumstances.