Eager to address opportunities of the Internet economy, particularly online auctions, Google will sponsor some 20 research projects at the Hebrew University in Jerusalem, Tel Aviv Universityand the Technion-Israel Institute of Technology in Haifa.

“The field of electronic auctions and markets has grown tremendously over the past decade, and has become a significant factor in the Internet industry and economy,” said Prof. Yossi Matias, managing director of the Google Israel R&D Center in Tel Aviv. “Google is proud to support open academic research which will advance the fundamental research in this evolving discipline.”

Matias added that “Israel boasts unusual academic excellence in the interdisciplinary foundations of electronic auctions and markets.”

The agreement was signed with the three universities’ technology transfer companies, Yissum at Hebrew University, Ramot at Tel Aviv University and TRDF Research and Development Foundation at the Technion.

Researchers will explore questions about the economic effects of viral networking, the dynamics of electronic markets and new formats of selling advertisements — e-commerce, online advertising, social networks and other new business models that challenge tradition.

For example, unlike in TV advertising, where the advertiser buys a fixed number of commercials, online systems like Google’s AdWords use a computerized auction where advertisers determine how much they are willing to pay and other relevance signals then contribute to an algorithm determining the online selection and rank of a particular ad.

These systems involve complex computation resulting in more relevant and effective ads. Academic research in areas such as algorithmic game theory and algorithmic mechanism design could provide ideas to improve online auctions and create more opportunities for advertisers and users.

The research will be conducted by academicians in fields ranging from computer science, statistics and game theory to artificial intelligence, optimization, economy and social sciences.