Games, auctions and beyond

Posted by Yossi Matias, Senior Director, Head of Israel R&D Center

In an effort to advance the understanding of market algorithms and Internet economics, Google has launched an academic research initiative focused on the underlying aspects of online auctions, pricing, game-theoretic strategies, and information exchange. Twenty professors from three leading Israeli academic institutions - the Hebrew University, Tel Aviv University and the Technion - will receive a Google grant to conduct research for three years.

In the past two decades, we have seen the Internet grow from a scientific network to an economic force that positively affects the global economy. E-commerce, online advertising, social networks and other new online business models present fascinating research questions and topics of study that can have a profound impact on society.

Consider online advertising, which is based on principles from algorithmic game theory and online auctions. The Internet has enabled advertising that is more segmented and measurable, making it more efficient than traditional advertising channels, such as newspaper classifieds, radio spots, and television commercials. These measurements have led to better pricing models, which are based on online real-time auctions. The original Internet auctions were designed by the industry, based on basic economic principles which have been known and appreciated for forty years.

As the Internet grows, online advertising is becoming more sophisticated, with developments such as ad-exchanges, advertising agencies which specialize in online markets, and new analytic tools. Optimizing value for advertisers and publishers in this new environment may benefit from a better understanding of the strategies and dynamics behind online auctions, the main driving tool of Internet advertising.

These grants will foster collaboration and interdisciplinary research by bringing together world renowned computer scientists, engineers, economists and game theorists to analyze complex online auctions and markets. Together, they will help bring this area of study into mainstream academic scientific research, ultimately advancing the field to the benefit of the industry at large.

The professors who received research grants include:

• Hebrew University: Danny Dolev, Jeffrey S. Rosenschein, Noam Nisan (Computer Science and Engineering); Liad Blumrosen, Alex Gershkov, Eyal Winter (Economics); Michal Feldman and Ilan Kremer (Business). The last six are also members of the Center for the Study of Rationality.
• Tel Aviv University: Yossi Azar, Amos Fiat, Haim Kaplan, and Yishay Mansour (Computer Science); Zvika Neeman (Economics); Ehud Lehrer and Eilon Solan (Mathematics); and Gal Oestreicher (Business).
• Technion: Seffi Naor (Computer Science); Ron Lavi (Industrial Engineering); Shie Mannor and Ariel Orda (Electrical Engineering).

In addition to providing the funds, Google will offer support by inviting the researchers to seminars, workshops, faculty summits and brainstorming events. The results of this research will be published for the benefit of the Internet industry as a whole, and will contribute to the evolving discipline of market algorithms.