Second Price Auctions

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

  1. Second price auctions have an equilibrium in which all players submit their true valuations for the good.
  2. 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.

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