A sealed-bid second price auction in which participants each simultaneously submit bids.
The auctioneer discloses the identity of the highest bidder who is declared the winner. The price paid, however, is equal to the second-highest bid placed.
This format is named after William Vickrey who first described it and pointed out that bidders have a dominant strategy to bid their true values.
This auction format is often strategically identical to an English auction.
updated: 12 August 2005
HOW TO CITE THIS ENTRY
- To learn more:
- See news articles on auctions.
- Try a winner's curse applet on the applets page.
- Read about auction experiments at e-Economics.net.
- Learn about auctions by reading lecture notes.