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Bidding Rules Used with a Vickrey Auction
In a Vickrey auction, a winner pays the amount of the highest losing bid (the highest unsuccessful bid). In addition, all bids are sealed until the auction ends. Because bids are sealed, bidders are unaware of any bids but their own and are more inclined to bid based on the value of an item rather than what other bidders will bid. The Sealed-bid aspect of a Vickrey auction also eliminates last-minute bidding.
No bidder is deterred out of fear of paying too high a price. This auction type is used in the financial market for refinancing credit or foreign exchange. A Vickrey auction can only have a quantity of one.
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Siebel eAuction Guide Published: 18 April 2003 |