A single-item auction in which the highest bidder wins and pays the highest competing bid. Under private values and quasilinear utility, bidding one's valuation is a dominant strategy: if the competing maximum is below one's value, winning at that price is best; if it is above one's value, losing is best; equality gives zero utility either way. Thus truthful bidding is an ex post Nash equilibrium.
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A Vickrey auction, also known as a second-price sealed-bid auction, is a type of auction where bidders submit written bids without knowing the other bidders' offers. The highest bidder wins the auction, but the price paid is determined by the second-highest bid. Key characteristics of a Vickrey auction include: 1. **Sealed Bids**: Bidders submit their bids privately and do not know the bids of other participants.