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Brown bag seminar | Nested contexts

Online advertisement has recently become the largest ad segment in the world, its success is arguably due to contextuality of ads to match consumers and advertisers and using auctions to extract revenue. Researcher from New Economic School (NES) Sergei Izmalkov together with co-author explores an intermediated two-sided market in which an online platform matches consumers and firms to study a joint matching and auction design problem of the platform.

Stockholm Institute of Transition Economics cordially invites you to join the online brown bag seminar `Nested Contexts´ with Sergei Izmalkov (co-author Levent Celik, City University of London). Read the abstract below!

Sergei Izmalkov is a Senior Lecturer and Program Director of the MA program at the New Economic School in Russia. Sergei finished his PhD at Pennsylvania State University, 2002. His research interests are within Economic Theory and Mechanism Design.

Abstract

Online advertisement has recently become the largest ad segment in the world, its success is arguably due to (i) contextuality of ads to match consumers and advertisers (firms) and (ii) using auctions to extract revenue. We offer a model of an intermediated two-sided market in which an online platform matches consumers and firms to study a joint matching and auction design problem of the platform. The key element is the choice of the precision of contexts by the platform or, equivalently, information disclosure policy. In practice a context can be any set of factors relevant for transaction, e.g. location, consumer preferences, product characteristics. The main trade-off is then a better (higher valued) matching to a consumer versus reduced competition and thus decreased ability to extract revenue, since only those firms that fit the context description and bid on it compete for the consumer. We show that the optimal number (or size) of contexts is finite and varies with the overall number of advertisers, the higher is competition the more detailed context description is. An immediate implication is that the optimal disclosure of consumer information to competing firms is never complete, but its precision grows with competition.

Interested in joining the seminar? Please contact site@hhs.se and type the subject box with "Brown bag seminar at SITE"- the Zoom link will be sent to you by email with further instructions!

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