Question: You're entering a second-price auction for sports inventory. You're the highest bidder and bid $5.00. The second-highest bidder bids $4.00. As the auction winner, what will you pay for these impressions?
- $5.01
- $5.00
- $4.00
- $4.01
Explanation
A second-price auction charges the winning buyer just above the next-highest eligible bid. The winner’s own bid determines auction eligibility and competitiveness, but it is not the final clearing price. With a second-highest bid of $4.00, the clearing price adds the standard minimum increment. This produces a final media cost of $4.01 for the winning impressions.
Why the other options are incorrect
$5.01 is incorrect because a second-price auction does not charge above the winning bid.
$5.00 is incorrect because the winner does not pay their full bid in this auction model.
$4.00 is incorrect because the clearing price must exceed the second-highest bid by the minimum increment.
Source for verification
https://support.google.com/displayvideo/answer/3289702
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