If some bidders are naive, and they bid the highest amount they're willing to pay, then they may end up overpaying.

232

It's not a true Vickrey mechanism.

202

Remarkably, under this pricing scheme, it is optimal for each advertiser to bid his actual value per click, regardless of what other advertisers do.

158

At the very least, we want to educate advertisers about the fact that in some sense they are being taken advantage of. Under the current mechanism, if they don't think carefully about their bidding strategies, they can end up paying a lot more to the search engines than they need to.

152

Overall, this would stabilize the auction system.

146

Companies would be much better off using such resources to enhance their products, improve customer service, or what have you.

142