Like the first-price auction, the bids are sealed, and each bidder is ignorant of other bids. In other words, a winner pays less than the highest bid. We will see later that the U.S. Treasury Department is experimenting with this type of auction to sell the national debt. 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 .