Sponsored search, market equilibria, and the Hungarian Method

Paul Dütting, Monika Henzinger, Ingmar Weber

Research output: Contribution to journalArticle

6 Citations (Scopus)


Matching markets play a prominent role in economic theory. A prime example of such a market is the sponsored search market. Here, as in other markets of that kind, market equilibria correspond to feasible, envy free, and bidder optimal outcomes. For settings without budgets such an outcome always exists and can be computed in polynomial-time by the so-called Hungarian Method. Moreover, every mechanism that computes such an outcome is incentive compatible. We show that the Hungarian Method can be modified so that it finds a feasible, envy free, and bidder optimal outcome for settings with budgets. We also show that in settings with budgets no mechanism that computes such an outcome can be incentive compatible for all inputs. For inputs in general position, however, the presented mechanism - as any other mechanism that computes such an outcome for settings with budgets - is incentive compatible.

Original languageEnglish
Pages (from-to)67-73
Number of pages7
JournalInformation Processing Letters
Issue number3
Publication statusPublished - 1 Jan 2013
Externally publishedYes



  • Algorithms
  • Budget limits
  • Envy freeness
  • Incentive compatibility
  • Matching markets

ASJC Scopus subject areas

  • Information Systems
  • Computer Science Applications
  • Signal Processing
  • Theoretical Computer Science

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