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The winner pays the price that the 2nd highest bid. This means all bidders in the auction have a reason to send an honest bid rather than trying to game the sy
by VHRanger 3y ago
The winner pays the price that the 2nd highest bid.
This means all bidders in the auction have a reason to send an honest bid rather than trying to game the system.
The person "selling" in the auction also has an efficient outcome.
- n1b0m 3y agoYeah finally got why it makes sense to make an honest bid. Thanks
- aidenn0 3y agoThough we should note this only works in the absence of collusion. If a bidder colludes with the seller, then they can increase the amount the highest bidder pays by bidding a very high second-highest bid. If the bidders collude, they can get a very low price. This is (obviously) true of most auction systems, but for sufficiently public English auctions, bidders that are otherwise uninterested in an item might bid on an item that is going for obviously far below market.