Ad vs Organic: Revisiting Incentive Compatible Mechanism Design in E-commerce Platforms
Ningyuan Li, Yunxuan Ma, Yang Zhao, Qian Wang, Zhilin Zhang, Chuan Yu, Jian Xu, Bo Zheng, Xiaotie Deng
Abstract
On typical e-commerce platforms, a product can be displayed to users in two possible forms, as an ad item or an organic item. Usually, ad and organic items are separately selected by the advertising system and recommendation system, and then combined by a content merging mechanism. Although the design of the content merging mechanism has been extensively studied, little attention has been given to a crucial situation where there is an overlap between candidate ad and organic items. Despite its common occurrence, this situation is not correctly handled by almost all existing works, potentially leading to incentive problems for advertisers and the violation of economic constraints. To address these issues, we revisit the design of the content merging mechanism. We introduce a necessary property called form stability, and provide simplification results of the mechanism design problem. Furthermore, we design two simple mechanisms strictly ensuring desired economic properties including incentive compatibility, and demonstrate their guaranteed performance through competitive ratio analysis under certain conditions.
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Cited by top-tier papers3
- Beyond Advertising: Mechanism Design for Platform-Wide Marketing Service "QuanZhanTui"Ningyuan Li, Zhilin Zhang, Tianyan Long, Yuyao Liu et al.KDD 2025 · 1 citation
- On Designing the Optimal Integrated Ad Auction in E-commerce PlatformsYuchao Ma, Weian Li, Yuhan Wang, Zitian Guo et al.AAAI 2025
- Merging Mechanisms for Ads and Organic Items in E-commerce PlatformsNan An, Weian Li, Qi Qi, Liang ZhangAAAI 2025
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