The equilibrium bid functions of first price auctions balance the trade- off that a higher winning probability is 'bought' by a higher expected payment. As a result, the bidders' private information is revealed in the bids in shaded form only. In second price auctions with statictically independent private valuations, each bidder has a dominant strategy to bid exactly his valuation. With stastitically independent private valuations, an English auction is equivalent in terms of payoffs to a second price sealed bid auction. The first bidder to halt the clock wins the item and pays the price where he stopped the wheel.
Dutch auctions are strategically equivalent to first price sealed bid auctions.
The name derives from the fact that many agricultural products worldwide, but in particular Dutch flowers, are sold in this way. Simultaneous bidding game where the bidder that has submitted the highest bid is awarded the object, and all bidders pay their own bids. A subvariant is the second price all pay auction , also war of attrition , where each bidder pays his own bid but the winner only pays the second highest bid. In order to prepare profitable bids, the bidders then have to estimate the likely information obtained by rivalling bidders. In this sense, winning the auction is 'bad news' that must be anticipated and incorporated into the bids, in order to avoid falling prey to a so-called winner's curse .