A Model for the Dynamics of Bidders in the Simulation of Keyword Auctions

A dynamic population model is proposed for the study of keyword auctions run on search engines. In this model bidders decide to join or leave the auction, depending on the results of the previous auction round. Through the use of a simulation scenario, we show that the model converges to a steady state quite fast, and that a significant portion of the bidders act just for one or two rounds, while a few bidders submit bids for most of the auction rounds but do not exhibit a concentration power on the advertising space awarded by the search engine.