Things I've Been Reading # 3

Some odds and ends

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1. I read with great interest several practically minded papers by Michael Ostrovsky. The first was on choice screen auctions. The EU recently required that Google make it easier for people to use other search engines on their browser, which they did by implementing a “choice screen”. But which browsers should be on there? If anyone could apply, the choice screen would be unusably large. On the other hand, simply including the popular ones would defeat the purpose of encouraging competition. Google auctioned off the slots (broken down geographically). All’s well and good.
   
   Buuuuuuut, there’s a catch. Each company which won a lottery paid per installation, not per person before whom they appeared. This means that popular companies which do not get much from each user, perhaps because they are less aggressive advertising, found it not worthwhile to buy slots. Meanwhile, browsers which bombard the user with ads and have far fewer users find it more worthwhile to buy spots. The choice screen ends up featuring none of the popular ones. In between the paper being written and it being published, Google changed their mechanism to per appearance. Just goes to show how seemingly small changes in auction rules can cause big changes in outcomes.