The Dim-Post

May 28, 2009

Non budget related economics writing

Filed under: finance — danylmc @ 7:50 am

Stephen Levy profiles Hal Varian, Google’s chief economist:

Varian is an expert on what may be the most successful business idea in history: AdWords, Google’s unique method for selling online advertising. AdWords analyzes every Google search to determine which advertisers get each of up to 11 “sponsored links” on every results page. It’s the world’s biggest, fastest auction, a never-ending, automated, self-service version of Tokyo’s boisterous Tsukiji fish market, and it takes place, Varian says, “every time you search.” He never mentions how much revenue advertising brings in. But Google is a public company, so anyone can find the number: It was $21 billion last year.


  1. the dawn of the Age of Algorithm

    only recently learnt that there was an auction system at the heart of google – from a friend who runs an internet company. it was a revelation.

    still can’t help but think that all this is still based on percption – that plus a very complex system could make life ineresting.

    Comment by Neil — May 28, 2009 @ 8:35 am

  2. Bernard Chazelle is a bit of a prophet of algorithms –

    this is very interesting –

    “Is there any hope for a “calculus” of algorithms that would enable us to knead them like Play-Doh to form new algorithmic shapes from old ones? Algebraic geometry tells us what happens when we throw in a bunch of polynomial equations together. What theory will tell us what happens when we throw in a bunch of algorithms together? As long as they remain isolated, free-floating creatures, hatched on individual whims for the sole purpose of dispatching the next quacking duck flailing in the open-problems covey, algorithms will be parts without a whole; and the promise of the Algorithm will remain a promise deferred.”

    sort of sounds like what’s happeng at google

    Comment by Neil — May 28, 2009 @ 9:27 am

  3. it’s not up yet – probably next week – but there’ll be an interview with Chazelle here:

    Comment by Neil — May 28, 2009 @ 9:39 am

  4. Never realised this:
    “The problem with an all-at-once auction, however, was that advertisers might be inclined to lowball their bids to avoid the sucker’s trap of paying a huge amount more than the guy just below them on the page. So the Googlers decided that the winner of each auction would pay the amount (plus a penny) of the bid from the advertiser with the next-highest offer. (If Joe bids $10, Alice bids $9, and Sue bids $6, Joe gets the top slot and pays $9.01. Alice gets the next slot for $6.01, and so on.) Since competitors didn’t have to worry about costly overbidding errors, the paradoxical result was that it encouraged higher bids.”

    Comment by Gareth — May 28, 2009 @ 10:30 am

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