One wonders why any seller would choose this method to auction goods. It seems obvious that a seller would make more money by using a first-price auction, but, in fact, that has been shown to be untrue. Bidders fully understand the rules and modify their bids as circumstances dictate. In the case of a Vickrey auction, bidders adjust upward. No one is deterred out of fear that he will pay too high a price.
Aggressive bidders receive sure and certain awards but pay a price closer to market consensus.
The price that winning bidder pays is determined by competitors' bids alone and does not depend upon any action the bidder undertakes. Less bid shading occurs because people don't fear winner's curse . Bidders are less inclined to compare notes before an auction. This type of auction has been used in former Czechoslovakia to refinance credit and in Guinea, Nigeria, and Uganda for foreign exchange. In such a case, participants could bid in the ascending format and the winner would ultimately pay the price of the second-highest bid.