second-price auctions

A second-price auction is a bidding process where participants submit their bids without knowing others' offers. The highest bidder wins, but the price they pay is the amount of the second-highest bid. For example, if you bid $100 and the next highest bid is $80, you win but only pay $80. This format encourages bidders to bid their true value, as they won’t pay more than necessary, creating a fairer outcome and reducing the risk of overbidding. It's commonly used in online advertising and some art auctions.