Second Highest Bid auctions
August 5, 2008
There have been several articles documenting the work of Google’s Salar Kamangar and Eric Veach in bringing this to AdWords. What is lesser known (atleast to me )is that they implemented this model to solve another problem entirely. I came across this old talk from a Google employee – in the speaker notes, it talks about how Kamangar and Veach implemented this feature to stop advertisers from logging into the system and modifying their bids constantly (since that’s what people tend to do in an open English auction). By implementing a second price auction, they were hoping to reduce the load on the system.