Title

Optimal Contract-Sizing in Online Display Advertising for Publishers with Regret Considerations

Document Type

Article

Publication Date

1-2014

Keywords

newsboy problem, operations management, risk

Digital Object Identifier (DOI)

https://doi.org/10.1016/j.omega.2013.06.001

Abstract

In this paper, we study optimal contract problems for online display advertisements with pay-per-view pricing scheme. We first provide and analyze a single contract model, which is shown to be equivalent to the newsvendor problem. We then consider a stochastic optimization problem with two different advertisements and show that a contract to display both of them is not optimal. However, we show that a contract to display of both advertisements may be optimal when we consider the publisher's regret. We consider a chance constraint for the publisher's regret and provide numerical experiments that illustrate the change of optimal strategy for different probability levels.

Was this content written or created while at USF?

No

Citation / Publisher Attribution

Omega, v. 42, issue 1, p. 201-212