The Right Way to Enter an Auction
The McCook School District, as described in the link below, is auctioning off classroom materials such as desks, books, chairs, etc. This auction is planned to be a silent auction, but is not stated in the article whether the auction would be first price or second price. Regardless of which type of silent auction, either first or second price, the McCook School District, as the seller, would still be able to raise the same amount of money in each auction. This is because if the school auctions the items as first price, the bids would be lower than the bidders true value but the prices of the items would be sold at the maximum bid. If the school auctions the items as second price, the bids would be equal to the bidders true value but the prices of the items would be sold at the second highest bid. In either case, these bids and prices that the item would sell for evens out between a first and second price auction, which would allow the McCook School district to make around the same amount of money during the auction regardless of the type of auction.
Since the type of auction is not stated in the article linked below it should be assumed that the school district would inform the bidders on the type of auction that will occur. However, in order to make sure the bidders can bid most dominantly, the next paragraph will state what type of bid each bidder should make.
If the auction is a first price sealed auction, each bidder should bid slightly below their true value. This is because with regards to the payoff that each bidder will receive, if a bidder bids a value equal to their true value, and they win, their payoff will be zero. However, if a bidder bids slightly below their true value in a first price sealed auction, and they win, they will have a positive payoff. If the auction is a second price sealed auction, each bidder should bid a value equal to their true value. This is because if the bidder wins, they will pay the price of the second highest bid, and would therefore receive a positive payoff. It is important for the McCook School District to notify their bidders on the type of auction being held, as the type of auction should affect the type of bid that each participant makes.
http://www.mccookgazette.com/story/2347059.html