In a sealed-bid, second-price auction, you should bid
A)your estimate of what others value the good at.
B)one dollar more than your estimate of what the second-highest bid will be.
C)your highest value.
D)the common value of the good.

Question

Quizplus · Accepted Answer

In a sealed-bid, second-price auction, the best strategy is to bid your true highest value for the item. This is because the winner pays the second-highest bid, not their own, so bidding your true value ensures you do not pay more than you believe the item is worth and maximizes your chance of winning if the item's value to you is higher than others'.

In a Sealed-Bid, Second-Price Auction, You Should Bid