Bid rules are automated rules that an advertiser can put in place to regulate the bidding on a particular keyword. For example, a bid rule could tell the search engine to pause a keyword whenever its ROI drops below $1.00 or to increase the bid on a keyword whenever the keyword falls below an average position of 2.
For advertisers with extensive keyword lists and/or extremely clear goals, bid rules can be a good tool to manage accounts. Even better, they are now available for free within the Google interface, and come standard on such third party platforms as Kenshoo. However, bid rules can also cause a lot of problems, and consequently should be used with caution.