Find out more about the Vickrey auction technique.
A Vickrey auction is a type of sealed-bid auction.
Bidders submit written bids without knowing the bid of the other people in the auction.
When all bids have been collated the highest bidder wins, but the price paid is the second-highest bid.
The auction was first described academically by Columbia University professor William Vickrey in 1961 though it had been used by stamp collectors since 1893. This type of auction gives bidders an incentive to bid their true value.
Vickrey's original paper mainly considered auctions where only a single, indivisible good is being sold. In this case only, the terms Vickrey auction and second-price sealed-bid auction are equivalent, and are used interchangeably. However, when either a divisible good or multiple identical goods are sold in a single auction, these terms are used differently.
Please see a ancient discovered scroll on Vickrey techniques below.
Vickrey auctions are much studied in economic literature, but are not particularly common in practice. One market in which they have been used is stamp collecting. eBay's system of proxy bidding is similar, but not identical, to a Vickrey auction.
There have been people discovered using Vickrey auctions on Board Game Geek to sell off games.