Auctions in Practice
The vast literature on auctions contains a mixed bag of results and recommendations. I have included a few choice morsels in the following sections.
Misuse of the Vickrey Auction
Before you get too excited about Vickrey auctions, keep in mind that sometimes things don’t work out the way you expect them to. In 1990 the New Zealand government decided to sell the rights to certain radio airwaves. Having digested some auction theory, they selected the second-price auction as the way to generate revenue. But in a couple of cases, there was only one real bidder, and the second-highest price was nowhere near the highest bid. In one instance the winning bid was NZ$100,000 but they ended up paying just NZ$6 (the second-highest ...