Title: "Matching Ads to Users: Performance Analysis of an Advertising Search Engine" Slides.pdf (with Shajarisales N.)
Work-in-Progress
Abstract: In this paper, we analyze the relationship between the utility that users get from engaging with ads, advertisers' value per click, and the ad allocation made by Yahoo's search engine. In particular, we study the allocation bias of the search engine towards users' preference and advertisers' value-per-click of impressions. The bias is measured using the concept of Optimal Matching. This edit distance compares the observed allocation of ads displayed by Yahoo and the rank of advertisements based on users' welfare and willingness to pay of advertisers. We apply the proposed methodology using auction data from a set of popular keywords.
Results suggest that the ad allocation of Yahoo's search engine is biased towards users' preferences. We also find that users' perceived quality of the ad is not necessarily aligned with advertisers' value-per-click. I.e. some advertisers are willing to pay a high price for showing an ad that users consider disruptive. Finally, we observe that some improvements can be done in the allocation made by Yahoo's search engine. More specifically, our counterfactual exercises show that for some keywords we can improve the expected click through rate, expected user welfare, and increase the expected value-per-click of the impression.
Work-in-Progress
Abstract: In this paper, we analyze the relationship between the utility that users get from engaging with ads, advertisers' value per click, and the ad allocation made by Yahoo's search engine. In particular, we study the allocation bias of the search engine towards users' preference and advertisers' value-per-click of impressions. The bias is measured using the concept of Optimal Matching. This edit distance compares the observed allocation of ads displayed by Yahoo and the rank of advertisements based on users' welfare and willingness to pay of advertisers. We apply the proposed methodology using auction data from a set of popular keywords.
Results suggest that the ad allocation of Yahoo's search engine is biased towards users' preferences. We also find that users' perceived quality of the ad is not necessarily aligned with advertisers' value-per-click. I.e. some advertisers are willing to pay a high price for showing an ad that users consider disruptive. Finally, we observe that some improvements can be done in the allocation made by Yahoo's search engine. More specifically, our counterfactual exercises show that for some keywords we can improve the expected click through rate, expected user welfare, and increase the expected value-per-click of the impression.
Title: "Optimal Reserve Prices in Upstream Auctions: Empirical Application on Online Video Advertising" (with Chammas S., and Lee K.) Download
2016 ACM SIGKDD Conference
Abstract: We consider optimal reserve prices in BrightRoll Video Exchange when the inventory opportunity comes from other exchanges (downstream marketplaces). We show that the existence of downstream auctions impacts the optimal floor. Moreover, it renders the classical derivation of the floor set by a monopolist inadequate and suboptimal. We derive the new downstream-corrected reserve price and compare its performance with respect to existing floors and the classical optimal monopoly price. In our application, the downstream-corrected reserve price proves superior to both.
The proposed model also deals with data challenges commonly faced by exchanges: limited number of logged bids in an auction, and uncertainty regarding the bidding behavior in other exchanges.
The relevance of this study transcends its particular context and is applicable to a wide range of scenarios where sequential auctions exist, and where marketplaces interact with each other.
2016 ACM SIGKDD Conference
Abstract: We consider optimal reserve prices in BrightRoll Video Exchange when the inventory opportunity comes from other exchanges (downstream marketplaces). We show that the existence of downstream auctions impacts the optimal floor. Moreover, it renders the classical derivation of the floor set by a monopolist inadequate and suboptimal. We derive the new downstream-corrected reserve price and compare its performance with respect to existing floors and the classical optimal monopoly price. In our application, the downstream-corrected reserve price proves superior to both.
The proposed model also deals with data challenges commonly faced by exchanges: limited number of logged bids in an auction, and uncertainty regarding the bidding behavior in other exchanges.
The relevance of this study transcends its particular context and is applicable to a wide range of scenarios where sequential auctions exist, and where marketplaces interact with each other.
Title: "Audience Segment Effectiveness: Implementing a Blind Experiment" (with Chen D., Li Y., Wang Z., and Zheng Y.)
Working Paper
Abstract: We propose an experiment to evaluate the effectiveness of Yahoo! audience segments. The suggested methodology compares the segment performance against a control group, and removes the ad-selection bias introduced by servers. Our preliminary results using adverting campaigns targeting Spanish speakers suggest that we successfully removed the bias introduced by targeting algorithms. Furthermore, the click through rate (CTR) of the Spanish speaker segment is statistically greater than the general population behavior in the context of display ads on desktop. These observations, however, do not extend to display and video ads on mobile devices.
Working Paper
Abstract: We propose an experiment to evaluate the effectiveness of Yahoo! audience segments. The suggested methodology compares the segment performance against a control group, and removes the ad-selection bias introduced by servers. Our preliminary results using adverting campaigns targeting Spanish speakers suggest that we successfully removed the bias introduced by targeting algorithms. Furthermore, the click through rate (CTR) of the Spanish speaker segment is statistically greater than the general population behavior in the context of display ads on desktop. These observations, however, do not extend to display and video ads on mobile devices.
Title: "Congestion at Airports: Implementing a Two-Part Landing Fee at San Francisco International Airport" Download - Slides
R&R
Abstract: We discuss the modification in 2008 of the U.S. policy that regulates airport rates and charges. Under the new regulatory framework, airports can charge a two-part landing fee to relieve congestion. Such a landing fee scheme consists of the standard aircraft weight-based charge plus an operation charge applied in peak hours. The question is relevant, since flight delay is a serious problem in the U.S. economy and, so far, no airport has put into practice this type of charging scheme. We develop and estimate a structural model to investigate the consequences of implementing such a two-part landing fee at San Francisco International Airport. Our simulations suggest the higher the operation charge, the lower are the number of flights arriving during peak hours and the bigger are the sizes of aircraft. As a result, the level of congestion and total demand at San Francisco International Airport decrease.
Our model captures important characteristics of the airline industry that most of the previous literature has neglected: endogeneity of airport charges with respect to decisions of travelers and carriers, correlation across markets, and two decision variables of airlines (ticket price and flight frequency).
R&R
Abstract: We discuss the modification in 2008 of the U.S. policy that regulates airport rates and charges. Under the new regulatory framework, airports can charge a two-part landing fee to relieve congestion. Such a landing fee scheme consists of the standard aircraft weight-based charge plus an operation charge applied in peak hours. The question is relevant, since flight delay is a serious problem in the U.S. economy and, so far, no airport has put into practice this type of charging scheme. We develop and estimate a structural model to investigate the consequences of implementing such a two-part landing fee at San Francisco International Airport. Our simulations suggest the higher the operation charge, the lower are the number of flights arriving during peak hours and the bigger are the sizes of aircraft. As a result, the level of congestion and total demand at San Francisco International Airport decrease.
Our model captures important characteristics of the airline industry that most of the previous literature has neglected: endogeneity of airport charges with respect to decisions of travelers and carriers, correlation across markets, and two decision variables of airlines (ticket price and flight frequency).
Title: "Immunized International Alliances: a Sequential Game of Alliance Formation in the Airline Industry" Download
R&R
Abstract: This paper analyzes the incentives of competing airlines to form international alliances with carriers operating in other countries, and the concerns that competition authorities may have in granting such agreements. We consider a sequential game where a carrier (leader) first decides if it wants to establish a complementary international alliance with a foreign carrier. This agreement improves partners' coordination on international routes where both operate, letting them benefit from joint fares and capacity on these routes. Then, a competitor (follower) determines whether allying with another foreign carrier is its best response to the action taken by the leader. The alliance affects not only the international markets where airlines coordinate, but also the nature of competition in domestic markets. Several equilibria arise depending on the strength of the brand loyalty of travelers, economies of traffic density, and synergies derived from the alliance. Welfare analysis suggests that when forming an international alliance belongs to the set of equilibria, total surplus does not always increase. In some cases the leader decides to coordinate even if the alliance creates negative synergies, with the objective of deterring the alliance formation of the follower. In this scenario, competition authorities should be concerned about granting antitrust immunity to the alliance.
R&R
Abstract: This paper analyzes the incentives of competing airlines to form international alliances with carriers operating in other countries, and the concerns that competition authorities may have in granting such agreements. We consider a sequential game where a carrier (leader) first decides if it wants to establish a complementary international alliance with a foreign carrier. This agreement improves partners' coordination on international routes where both operate, letting them benefit from joint fares and capacity on these routes. Then, a competitor (follower) determines whether allying with another foreign carrier is its best response to the action taken by the leader. The alliance affects not only the international markets where airlines coordinate, but also the nature of competition in domestic markets. Several equilibria arise depending on the strength of the brand loyalty of travelers, economies of traffic density, and synergies derived from the alliance. Welfare analysis suggests that when forming an international alliance belongs to the set of equilibria, total surplus does not always increase. In some cases the leader decides to coordinate even if the alliance creates negative synergies, with the objective of deterring the alliance formation of the follower. In this scenario, competition authorities should be concerned about granting antitrust immunity to the alliance.
Title: "Airline-Airport Agreements in the San Francisco Bay Area: Effects on Airline Behavior and Congestion at Airports" Download
Special Issue of Economics of Transportation: Airlines and Airports. Economics of Transportation 3 (2014):58-79
Abstract: This paper provides a methodological framework to analyze the decisions of airlines and travelers taking into account the contractual agreement between airports and airlines. This contract sets the fees that carriers pay for landing, the rental rate for the terminal space that they occupy, as well as the methodology to determine these charges. Using data from San Francisco International Airport (SFO) and Metropolitan Oakland International Airport (OAK), we quantify the effects of changes in the agreement on the behavior of airlines and congestion at airports. In particular, we look at modifications in the design of charges and variations in the operating costs at airports. Counterfactuals suggest that different methodologies to compute charges and changes in airport costs may induce airlines to behave differently, affecting delays at airports.
Special Issue of Economics of Transportation: Airlines and Airports. Economics of Transportation 3 (2014):58-79
Abstract: This paper provides a methodological framework to analyze the decisions of airlines and travelers taking into account the contractual agreement between airports and airlines. This contract sets the fees that carriers pay for landing, the rental rate for the terminal space that they occupy, as well as the methodology to determine these charges. Using data from San Francisco International Airport (SFO) and Metropolitan Oakland International Airport (OAK), we quantify the effects of changes in the agreement on the behavior of airlines and congestion at airports. In particular, we look at modifications in the design of charges and variations in the operating costs at airports. Counterfactuals suggest that different methodologies to compute charges and changes in airport costs may induce airlines to behave differently, affecting delays at airports.