Second-Price (Vickrey) Auction
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A Second-Price (Vickrey) Auction is an auction in which the highest bidder wins but the price paid is the second-highest bid.
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- Counter-Example(s):
- See: Vickrey–Clarke–Groves Auction, English Auction, Incentive Compatibility, Generalized Second-Price Auction, Sealed-Bid Auction.
References
2020
- (Wikipedia, 2020) ⇒ https://en.wikipedia.org/wiki/Vickrey_auction Retrieved:2020-2-27.
- A Vickrey auction is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest bid. This type of auction is strategically similar to an English auction and gives bidders an incentive to bid their true value. The auction was first described academically by Columbia University professor William Vickrey in 1961 though it had been used by stamp collectors since 1893. In 1797 Johann Wolfgang von Goethe sold a manuscript using a sealed-bid, second-price auction. Vickrey's original paper mainly considered auctions where only a single, indivisible good is being sold. The terms Vickrey auction and second-price sealed-bid auction are, in this case only, equivalent and used interchangeably. When either a divisible good or multiple identical goods are sold in a single auction, however, these terms are used differently. In the case of multiple identical goods, the bidders submit inverse demand curves and pay the opportunity cost. Vickrey auctions are much studied in economic literature but uncommon in practice. Generalized variants of the Vickrey auction for multiunit auctions exist, such as the generalized second-price auction used in Google's and Yahoo!'s online advertisement programmes [1] [2] (not incentive compatible) and the Vickrey-Clarke-Grove Auction (incentive compatible).
- ↑ Benjamin Edelman, Michael Ostrovsky, and Michael Schwarz: "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords". American Economic Review 97(1), 2007 pp 242–259.
- ↑ Hal R. Varian: "Position Auctions". International Journal of Industrial Organization, 2006, .
2017
- https://adexchanger.com/platforms/big-changes-coming-auctions-exchanges-roll-dice-first-price/
- QUOTE: ... Buyers, publishers and ad tech companies who advocate a switch to first-price auctions say it’s because fair second-price auctions don’t exist anymore. SSPs have polluted them with hidden fees and manipulative auction dynamics.
Exchanges fiddle with clearing prices such that second-price auctions often close near the first price anyway. A $30 CPM bid might close at $29.99 or $28.50.
“Every exchange has some game they let you play with the auction dynamic that approximates a first-price auction,” said Eric Berry, CEO of TripleLift. “There are easy ways to plot first price vs. second price and see what shenanigans are happening.” ...
- QUOTE: ... Buyers, publishers and ad tech companies who advocate a switch to first-price auctions say it’s because fair second-price auctions don’t exist anymore. SSPs have polluted them with hidden fees and manipulative auction dynamics.