In early systems, the advertiser pays the amount equals
to its bid (first-price)
– The advertiser keeps on sending a dummy search
request, checks its position, and adjusts its price.
– The bid prices keep on changing/unstable.
• In recent systems (including Google), the advertiser,
who wins the k-th slot, pays the price equal to the k+1-
st bid (second-price).
– The bid prices become more stable.
The most frequently used auction mechanism in the world!
Lessons Learned: for a mechanism, which is frequently
used on the Internet by users including automated
agents, having theoretical robustness is crucial.