# HOBA: Hierarchical On-Policy Bidding Agents for Adaptive Online Advertising

arXiv: https://arxiv.org/abs/2607.24779 · HTML: https://mlsanity.com/paper/2607.24779/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Placed in Financial trading and forecasting agents, one of 16 directions in LLM agents and tool use.
- Builds on 22 of its 44 references that are in the map.
- First posted on arXiv 17 Jun 2026.

## Placed in

- LLM agents and tool use / [Financial trading and forecasting agents](https://mlsanity.com/agents/financial-trading-and-forecasting-agents/)
- Offline RL and imitation learning from data / [Decision transformers and sequence modeling](https://mlsanity.com/offlinerl/decision-transformers-and-sequence-modeling/)

## Builds on (most cited first, 22 of 22)

- [Proximal Policy Optimization Algorithms](https://mlsanity.com/paper/1707.06347/) (2017)
- [Sentence-BERT: Sentence Embeddings using Siamese BERT-Networks](https://mlsanity.com/paper/1908.10084/) (2019)
- [ReAct: Synergizing Reasoning and Acting in Language Models](https://mlsanity.com/paper/2210.03629/) (2022)
- [Reflexion: Language Agents with Verbal Reinforcement Learning](https://mlsanity.com/paper/2303.11366/) (2023)
- [Billion-scale similarity search with GPUs](https://mlsanity.com/paper/1702.08734/) (2017)
- [Asynchronous Methods for Deep Reinforcement Learning](https://mlsanity.com/paper/1602.01783/) (2016)
- [Offline Reinforcement Learning: Tutorial, Review, and Perspectives on Open Problems](https://mlsanity.com/paper/2005.01643/) (2020)
- [Conservative Q-Learning for Offline Reinforcement Learning](https://mlsanity.com/paper/2006.04779/) (2020)
- [Decision Transformer: Reinforcement Learning via Sequence Modeling](https://mlsanity.com/paper/2106.01345/) (2021)
- [D4RL: Datasets for Deep Data-Driven Reinforcement Learning](https://mlsanity.com/paper/2004.07219/) (2020)
- [Offline Reinforcement Learning with Implicit Q-Learning](https://mlsanity.com/paper/2110.06169/) (2021)
- [Off-Policy Deep Reinforcement Learning without Exploration](https://mlsanity.com/paper/1812.02900/) (2018)
- [Language Models as Zero-Shot Planners: Extracting Actionable Knowledge for Embodied Agents](https://mlsanity.com/paper/2201.07207/) (2022)
- [An Algorithmic Perspective on Imitation Learning](https://mlsanity.com/paper/1811.06711/) (2018)
- [Data-Efficient Hierarchical Reinforcement Learning](https://mlsanity.com/paper/1805.08296/) (2018)
- [FeUdal Networks for Hierarchical Reinforcement Learning](https://mlsanity.com/paper/1703.01161/) (2017)
- [KTO: Model Alignment as Prospect Theoretic Optimization](https://mlsanity.com/paper/2402.01306/) (2024)
- [OSQP: An Operator Splitting Solver for Quadratic Programs](https://mlsanity.com/paper/1711.08013/) (2017)
- [Doubly Robust Policy Evaluation and Optimization](https://mlsanity.com/paper/1503.02834/) (2015)
- [Offline A/B testing for Recommender Systems](https://mlsanity.com/paper/1801.07030/) (2018)
- [Real-Time Bidding by Reinforcement Learning in Display Advertising](https://mlsanity.com/paper/1701.02490/) (2017)
- [Applying Opponent Modeling for Automatic Bidding in Online Repeated Auctions](https://mlsanity.com/paper/2212.02723/) (2022)

## Abstract (arXiv)

Online advertising bidding systems typically deploy multiple offline-trained expert models (e.g., PID controllers, model predictive control, offline RL policies) but face two critical limitations: lack of online adaptability to non-stationary auction markets, and reliance on costly manual tuning of hyperparameters such as bid bounds and budget pacing constraints. We propose HOBA (Hierarchical On-policy Bidding Agents), a hierarchical reinforcement learning framework that decouples strategic reasoning, model selection, and bid execution across three time scales. At the high level, a large language model infers hyperparameters from contextual signals through a Think-Act-Observe-Reflect loop with historical experience retrieval. At the mid level, a SARSA agent dynamically selects among expert models, incorporating causal adjustment to eliminate selection bias. At the low level, a dynamic expert pool (PID, MPC, IQL, Decision Transformer) executes bids under high-level constraints. This design confines online learning to discrete expert selection rather than continuous bid optimization, significantly reducing exploration risk while maintaining adaptability. Experiments on the AuctionNet benchmark and a large-scale A/B test demonstrate consistent improvements over state-of-the-art baselines. In a large-scale online deployment, HOBA delivered substantial business value, achieving a +3.6% increase in target cost, proving the effectiveness of our hierarchical multi-agent bidding paradigm.