This exciting and pioneering new overview of multiagent systems, which are online systems composed of multiple interacting intelligent agents, i.e., online trading, offers a newly seen computer science perspective on multiagent systems, while integrating ideas from operations research, game theory, economics, logic, and even philosophy and linguistics. The authors emphasize foundations to create a broad and rigorous treatment of their subject, with thorough presentations of distributed problem solving, game theory, multiagent communication and learning, social choice, mechanism design, auctions, cooperative game theory, and modal logics of knowledge and belief. For each topic, basic concepts are introduced, examples are given, proofs of key results are offered, and algorithmic considerations are examined. An appendix covers background material in probability theory, classical logic, Markov decision processes and mathematical programming. Written by two of the leading researchers of this engaging field, this book will surely serve as THE reference for researchers in the fastest-growing area of computer science, and be used as a text for advanced undergraduate or graduate courses.

Multiagent Systems: Algorithmic, Game-Theoretic, and Logical Foundations

A new era of theoretical computer science addresses fundamental problems about auctions, networks, and human behavior.

http://www.maths.lse.ac.uk/Personal/stengel/TEXTE/agt-stengel.pdf

Algorithmic Game Theory

We investigate the "generalized second-price" (GSP) auction, a new mechanism used by search engines to sell online advertising. Although GSP looks similar to the Vickrey-Clarke-Groves (VCG) mechanism, its properties are very different. Unlike the VCG mechanism, GSP generally does not have an equilibrium in dominant strategies, and truth-telling is not an equilibrium of GSP. To analyze the properties of GSP, we describe the generalized English auction that corresponds to GSP and show that it has a unique equilibrium. This is an ex post equilibrium, with the same payoffs to all players as the dominant strategy equilibrium of VCG.

/pdf/internet-advertising-and-the-generalized-second-price-1uh5jxi66t.pdf

Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords

S4 is a general-purpose, distributed, scalable, partially fault-tolerant, pluggable platform that allows programmers to easily develop applications for processing continuous unbounded streams of data. Keyed data events are routed with affinity to Processing Elements (PEs), which consume the events and do one or both of the following: (1) emit one or more events which may be consumed by other PEs, (2) publish results. The architecture resembles the Actors model, providing semantics of encapsulation and location transparency, thus allowing applications to be massively concurrent while exposing a simple programming interface to application developers. In this paper, we outline the S4 architecture in detail, describe various applications, including real-life deployments. Our design is primarily driven by large scale applications for data mining and machine learning in a production environment. We show that the S4 design is surprisingly flexible and lends itself to run in large clusters built with commodity hardware.

/pdf/s4-distributed-stream-computing-platform-3mh9t7maap.pdf

S4: Distributed Stream Computing Platform

Online advertising allows advertisers to only bid and pay for measurable user responses, such as clicks on ads. As a consequence, click prediction systems are central to most online advertising systems. With over 750 million daily active users and over 1 million active advertisers, predicting clicks on Facebook ads is a challenging machine learning task. In this paper we introduce a model which combines decision trees with logistic regression, outperforming either of these methods on its own by over 3%, an improvement with significant impact to the overall system performance. We then explore how a number of fundamental parameters impact the final prediction performance of our system. Not surprisingly, the most important thing is to have the right features: those capturing historical information about the user or ad dominate other types of features. Once we have the right features and the right model (decisions trees plus logistic regression), other factors play small roles (though even small improvements are important at scale). Picking the optimal handling for data freshness, learning rate schema and data sampling improve the model slightly, though much less than adding a high-value feature, or picking the right model to begin with.

/pdf/practical-lessons-from-predicting-clicks-on-ads-at-facebook-3v0cxs9foz.pdf

Practical Lessons from Predicting Clicks on Ads at Facebook

We present the results of a large field experiment on setting reserve prices in auctions for online advertisements, guided by the theory of optimal auction design suitably adapted to the sponsored search setting. Consistent with the theory, following the introduction of new reserve prices revenues in these auctions have increased substantially.

Reserve Prices in Internet Advertising Auctions: A Field Experiment

/pdf/reserve-prices-in-internet-advertising-auctions-a-field-9pjgd24qkd.pdf

Reserve prices in internet advertising auctions: a field experiment

We investigate the "generalized second price" auction (GSP), a new mechanism which is used by search engines to sell online advertising that most Internet users encounter daily. GSP is tailored to its unique environment, and neither the mechanism nor the environment have previously been studied in the mechanism design literature. Although GSP looks similar to the Vickrey-Clarke-Groves (VCG) mechanism, its properties are very different. In particular, unlike the VCG mechanism, GSP generally does not have an equilibrium in dominant strategies, and truth-telling is not an equilibrium of GSP. To analyze the properties of GSP in a dynamic environment, we describe the generalized English auction that corresponds to the GSP and show that it has a unique equilibrium. This is an ex post equilibrium that results in the same payoffs to all players as the dominant strategy equilibrium of VCG.

/pdf/internet-advertising-and-the-generalized-second-price-5dkknzr27f.pdf

Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords

How should players bid in keyword auctions such as those used by Google, Yahoo! and MSN?allWe consider greedy bidding strategies for a repeated auction on a single keyword, where in each round, each player chooses some optimal bid for the next round, assuming that the other players merely repeat their previous bid. We study the revenue, convergence and robustness properties of such strategies. Most interesting among these is a strategy we call the balanced bidding strategy (BB): it is known that BB has a unique fixed point with payments identical to those of the VCG mechanism. We show that if all players use the BB strategy and update each round, BB converges when the number of slots is at most 2, but does not always converge for 3 or more slots. On the other hand, we present a simple variant which is guaranteed to converge to the same fixed point for any number of slots. In a model in which only one randomly chosen player updates each round according to the BB strategy, we prove that convergence occurs with probability 1.We complement our theoretical results with empirical studies.

/pdf/greedy-bidding-strategies-for-keyword-auctions-2t8a0rweih.pdf

Michael Schwarz

Papers

Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords

Reserve Prices in Internet Advertising Auctions: A Field Experiment

Reserve prices in internet advertising auctions: a field experiment

Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords

Greedy bidding strategies for keyword auctions