Editing Auction Theory (section)

== <span style="color: #FFFFFF;">Applying</span> ==
'''Modeling 'The Vickrey Auction' (Truthful bidding strategy):'''
<syntaxhighlight lang="python">
def simulate_vickrey_auction(bids):
    """
    Winner is the highest bidder.
    Payment is the second-highest bid.
    """
    sorted_bids = sorted(bids, reverse=True)
    winner_bid = sorted_bids[0]
    payment = sorted_bids[1]
    
    return {
        "Winner Bid": winner_bid,
        "Actual Payment": payment,
        "Savings for Winner": winner_bid - payment
    }

# Bidders: [Alice: 100, Bob: 85, Charlie: 95]
bids = [100, 85, 95]
result = simulate_vickrey_auction(bids)
print(f"Winner pays: {result['Actual Payment']}")
# Alice wins, but only pays $95. This encourages Alice to 
# bid her 'True Value' of 100 without fear.
</syntaxhighlight>

; Auction Landmarks
: '''The 1994 FCC Spectrum Auction''' → The first time "Game Theory" was used to design a multi-billion dollar government sale. It was so successful it's called the "Greatest Auction in History."
: '''Google AdSense''' → Every time you load a webpage, a Vickrey-style auction happens in about 0.1 seconds to decide which ad to show you.
: '''Christie's & Sotheby's''' → The traditional houses that use English auctions for multi-million dollar art pieces.
: '''2020 Nobel Prize in Economics''' → Awarded to Paul Milgrom and Robert Wilson for their work in inventing new auction formats for complex goods.
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