Generalized First-Price Auctions

   It was introduced by Overture (now part of Yahoo!) in 1997 for selling internet advertising. In the original Overture auction design, each advertiser submitted a bid reporting the advertiser’s willingness to pay on a per-click basis, for a particular keyword. Advertising was was sold one click at a time (PPC). However, the mechanism was unstable due to the dynamic nature of the environment.

 
Example: Suppose there are two slots on a page and three bidders. An ad in the first slot receives 200 clicks per hour, while the second slot gets 100. Bidders 1, 2, and 3 have values per click of $10, $4, and $2, respectively. Suppose bidder 2 bids $2.01, to guarantee that he gets a slot. Then bidder 1 will not want to bid more than $2.02—he does not need to pay more than that to get the top spot. But then bidder 2 will want to revise his bid to $2.03 to get the top spot, bidder 1 will in turn raise his bid to $2.04, and so on. Clearly, there is no pure strategy equilibrium in the one-shot version of the game, and so if bidders best respond to each other, they will want to revise their bids as often as possible.

Reference:
[1]  Benjamin Edelman, Michael Ostrovsky, and Michael Schwarz. Internet Advertising and the Generalized Second-price Auction: Selling Billions of Dollars Worth of Key- words. American Economic Review, 97(1):242–259, 2007.