Which of the following is true of a second-price auction?
A) Bidders directly compete with one another.
B) Bidders submit their bids simultaneously.
C) Bidders know one another's bid.
D) Bidders always bid above their willingness to pay.

Question

Quizplus · Accepted Answer

In a second-price auction, bidders submit their bids simultaneously without knowing the other bidders' bids. The highest bidder wins the item, but pays the second-highest bid amount as the price. Therefore, bidders do not directly compete with each other and do not need to bid above their willingness to pay.

Which of the Following Is True of a Second-Price Auction