You’re entering a second-price auction for sports inventory. You’re the highest bidder and bid $5.00. The second-highest bidder bids $4.00. As the auction winner, what will you pay for these impressions?
- $5.01
- $5.00
- $4.00
- $4.01
Explanation:
A second-price auction is designed so that the winning bidder pays just one cent more than the bid of the second-highest bidder. This approach encourages bidders to bid their true maximum value for the impression, knowing that if they win, they only need to pay slightly above the next highest bid, in this case, $4.01, ensuring a fair price is paid based on the competitive bidding landscape.