TYPES
Towards transparency and privacy in the online advertising business

Markets with Strategic Multi-minded Mediators

Moran Feldman, Rica Gonen

Abstract

We consider the design of mechanisms for multi-sided exchanges that interact with strategic players-some of which have multi-dimension strategic spaces or are represented by mediators. Players act to optimize their own utilities. The mechanism designer, on the other hand, aims to optimize a social goal, i.e., the gain from trade. As the mediators control the information flow from their players to the mechanism, the mechanism faces strategic behavior not only from the players but also from mediators: a mediator acts strategically to maximize utility on behalf of the players he represents.

In particular, we focus on one example of the above setting which is motivated by the foreseeable future form of online advertising. Online advertising currently supports some of the most important Internet services, including: search, social media and user generated content sites. To overcome privacy concerns, it has been suggested to introduce user information markets through information brokers into the online advertising ecosystem. Such markets give users control over which data get shared in the online advertising exchange. We describe a model for the above foreseeable future form of online advertising, and design two mechanisms for the exchange of this model: a deterministic mechanism which is related to the vast literature on mechanism design through trade reduction and allows players with a multi-dimensional strategic space, and a randomized mechanism which can handle a more general version of the model.

Research highlights
  • We design mechanisms for multi-sided exchanges that interact with strategic players-some of which have multi-dimension strategic spaces or are represented by mediators.
  • We introduce a foreseeable future form of online advertising: user information markets through information brokers into the online advertising ecosystem.
  • We describe a model for the above foreseeable future form of online advertising, and design two mechanisms for the exchange of this model: a deterministic mechanism which is related to the vast literature on mechanism design through trade reduction and allows players with a multi-dimensional strategic space, and a randomized mechanism which can handle a more general version of the model.

Read the entire paper here

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