This lecture shows how players should bid in second price auctions, a common auction form in which the high bidder wins but pays a price equal to the second highest bid.
Takeaway Points
- Second price auctions have an equilibrium in which all players submit their true valuations for the good.
- This is true whether players know each other’s valuations or not. This picks up on deeper topics in game theory, such as incomplete information games and mechanism design.
