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Proxy bidding is an implementation of an English second-price auction used on eBay, in which the winning bidder pays the price of the second-highest bid plus a defined increment. It differs from a Vickrey auction in that bids are not sealed ; the "current highest bid" (defined as second-highest bid plus bid increment) is always displayed.
However, online auction sites, unlike live auctions, usually have an automatic bidding system which allows a bidder to enter their maximum acceptable bid. This is a hidden or proxy bid, known to the system, but not any other bidders; during the auction the actual bid is incremented only enough to beat the existing highest bid. For example, if ...
Online auctions often use an equivalent version of Vickrey's second-price auction wherein bidders provide proxy bids for items. A proxy bid is an amount an individual values some item at. The online auction house will bid up the price of the item until the proxy bid for the winner is at the top.
Proxy bid (also called an absentee bid) – a bid placed by an authorized representative of a bidder who is not physically present at the auction. Proxy bids are common in auctions of high-end items, such as art sales (where the proxy represents either a private bidder who does not want to be disclosed to the public, or a museum bidding on a ...
A Vickrey auction or sealed-bid second-price auction (SBSPA) is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest bid. This type of auction is strategically similar to an English auction and gives bidders an ...
Some sites also operate a system of mystery auctions, whereby the bidder is unaware of the product they are bidding on. Another variation on the theme is proxy bidding which involves the bidder stating their maximum bid for a particular product, and the auction site placing the bids for them automatically.