The difference between the first and second auction prices
The difference between the two is straightforward, but before we know it we need to know a little more about the two formats than just understanding the mechanics. The main difference between the two types lies in the model for determining the final price. Obviously, it refers to the final amount paid by the buyer. Despite the fact that the bid was the same in both cases. The first auction is very intuitive and logical – it means that the least one potential buyer bids, the highest wins and they pay the price they bid. What is a second price auction? Here, the aim is to give buyers the confidence to bid the best price without overpaying. The winner pays one penny more than the next highest bid. The difference with the first is that in a first price auction, setting a lower threshold cannot manipulate the clearing price.
What is a second price auction? The auction was first described by Columbia University professor William Vickrey in 1961, although sources say it was used by stamp collectors as early as 1893. The price they bid is rarely the exact amount they pay, as the winning bidder pays only $0.01 more than the second highest bid. The second-price auction is widely regarded as not the best solution for automation. Which marketplaces use it? The most common is ebay. It is a large international company that allows you to bid on the product you want to buy. The second-price auction model is not only known to programmatic.