William Vickrey: 2 ideas worth knowing

2 ideas from William Vickrey, each explained in a minute and credited to the original work. Free on Savvy.

The auction where bidding your true value is the smartest move
In a Vickrey auction, the highest bidder wins but pays only the second-highest bid, not their own. This quirky rule makes honest bidding a dominant strategy: bidding above or below…
— William Vickrey, Counterspeculation, Auctions, and Competitive Sealed Tenders
In this auction, the winner never has to pay their own bid
In a Vickrey auction, bidders submit sealed bids, the highest bidder wins, but pays only the amount of the second-highest bid, not their own. Economist William Vickrey showed this …
— William Vickrey, Counterspeculation, Auctions, and Competitive Sealed Tenders

Five ideas worth knowing, every week