Counterspeculation, Auctions, and Competitive Sealed Tenders

Vickrey, W. (1961). Counterspeculation, Auctions, and Competitive Sealed Tenders. Journal of Finance, 16(1), 8-37.

Type

Journal article

Intellectual base

Primary research

Year

1961

Volume

16

Issue

1

Pages

8-37

ISSN

1540-6261

DOI

10.1111/j.1540-6261.1961.tb02789.x

DOI registrant

Wiley

Link

https://doi.org/10.1111/j.1540-6261.1961.tb02789.x

Cited from

economics_finance, philosophy, statistics_experimental_design

Cited by

9 citations across 9 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Auction Theory
  • which introduced the second-price sealed-bid auction (Vickrey auction) and showed truthful bidding is a weakly dominant strategy in it — a design result with vast implications, as Vickrey (1961) himself noted.

    This sourceIntroduces the second-price sealed-bid (Vickrey) auction and proves truthful bidding is weakly dominant.

• Incentive Compatibility
  • The Vickrey-Clarke-Groves (VCG) mechanism — Vickrey (1961)

    This sourceOriginal derivation of the second-price sealed-bid auction and proof that truthful bidding is a dominant strategy; foundational result in auction theory and dominant-strategy mechanism design.

• Inversion
  • Economics and auction design: Vickrey reverse auctions (Vickrey 1961) invert traditional ascending-bid auctions to sealed-bid second-price mechanism; second-price auction inverts incentive structure to produce truthful bidding.

    This sourceOriginal derivation of the second-price sealed-bid auction and proof that truthful bidding is a dominant strategy; foundational result in auction theory and dominant-strategy mechanism design.

• Mechanism Design
  • These markets solve the binding problem: given decentralized generator costs and load values, aggregate them into clearing prices without a central planner having direct access to either.

    This sourceOriginal derivation of the second-price sealed-bid auction and proof that truthful bidding is a dominant strategy; foundational result in auction theory and dominant-strategy mechanism design.

• Pivotality
  • In mechanism design, the pivotal bidder in a Vickrey-Clarke-Groves auction pays the externality their presence imposes on others — structurally a pivotality calculation.

    This sourceFoundational paper on the second-price (Vickrey) auction underlying VCG, where a pivotal bidder pays the externality its presence imposes on others.

• Selective Information Severance
  • In economics and auction design, the double-blind and sealed-bid mechanisms sever the information that would enable collusion or strategic manipulation, and the design of markets routinely turns on what each party is prevented from knowing.

    This sourceAnalyzes sealed-bid auctions in which each bidder is severed from rivals' bids, removing the information that would enable collusion or strategic manipulation.

Domain-specific

• Dominated Strategy
  • In the Vickrey second-price sealed-bid auction, bidding one's true valuation weakly dominates every other bid: bidding below true value risks losing an auction one would have won at a profit, while bidding above risks winning at a price above one's value, and neither risk is compensated by any gain regardless of the other bidders' behavior

    This sourceThat truthful bidding weakly dominates all alternatives in the second-price sealed-bid auction, by the two-sided no-gain argument.

• Vickrey Auction
  • The Vickrey auction — introduced by William Vickrey (1961) — is a sealed-bid auction in which each bidder submits a single offer without seeing others' bids, the highest bidder wins, but pays not their own bid but the second-highest bid submitted.
• Vickrey–Clarke–Groves mechanism
  • A Vickrey–Clarke–Groves mechanism chooses an outcome maximizing the sum of reported valuations and uses Groves transfers whose agent-specific payment equals an others-only term minus the reported welfare of the other agents at the chosen outcome.

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