Today, while browsing eBay I stumbled on an auction for an enlarger. The interesting thing was not the item, but rather the fact that the seller had modified eBay’s traditional English auction-scheme by converting it into an Vickrey look-a-like open-bid second-price auction (a Vickrey auction is an auction where the bidders submit sealed bids to the auctioneer, but the winner only pays the second highest bid).
The thing is that all these standard auctions (English, Ductch, Sealed-bid first-price and Sealed-bid second-price auctions) are revenue equivalent under complete information, so given that result alone, it does not make any sence to tamper with the eBay-scheme.
Moreover, unless I’ve misunderstood the eBay setup, it seems totally utterly foolish to use a non-sealed-bid second-price auction scheme. That’s because you can easily win the auction by bidding a ridiculously large amount whereafter no-one else will submit a bid because they risk winning! (If they do, then they will have to pay a ridiculously large amount.) Thus, you win the auction and pay whatever was bid just prior to your bid.
But then again, I’ve probably just misunderstood something, because no-one could overlook that…
(NB! The scheme isn’t working in this case because the minimum bid seems to be “too high.”)