second-price sealed-bid auction

A second-price sealed-bid auction is a type of auction where all bidders submit their bids privately and simultaneously. The highest bidder wins the item, but instead of paying their own bid, they pay the second-highest bid. This encourages bidders to bid their true value because their final price is determined by the next highest offer, promoting honest bidding behavior. It’s often used in online auctions and for selling items where transparency and fairness are important, balancing potential profit for the seller with strategic bidding for participants.