First-price sealed-bid auction
Host this auctionEach bidder submits an offer privately. At closing, the highest bidder wins and pays the amount they offered. Bidders cannot see competing offers before choosing their own.
Make a private bid
The ticket is worth $80 to you. Your offer is filled in below; you can change it before submitting.
How much to offer
Your maximum is the most you would willingly pay. You would prefer to buy for less, but a lower offer is easier for a rival to beat. Bidding below your maximum is called bid shading.
How far below depends on the competition you expect. If a modest offer has a good chance of winning, you have less reason to offer more. If you expect a close contest, a lower bid is more likely to cost you the item. There is no fixed percentage below your maximum that suits every auction.
Does first-price raise more than second-price?
In a second-price auction, a buyer can bid their full limit and still pay less. In a first-price auction, that same offer would mean paying their full limit if they won. Buyers therefore have a reason to make lower offers in a first-price auction.
This change in bidding matters to the seller. Charging the winning bid does not guarantee more revenue if people offer less because of that rule. To compare the formats, you have to consider how much people would bid in each one.
Host this auction
Private bidding works when buyers can submit an offer but cannot follow a live contest. Choose a minimum price and a deadline. Bidders can replace their offers until closing, and only the latest accepted offer counts. Equal highest offers go to the bidder whose standing offer was accepted first.