Why can’t someone bid more than they can offer in a second price auctions?

Question

Why can’t an individual place a bid of 10,000$ on a pen, knowing they will only pay the last biggest bid of 10$, and no one can top their offer, because no one will pay that price?

In: 0

Answer 1

In typical implementations of second-price auctions the bids are sealed. So you don’t know what the second price is. So you don’t “know” you’re only paying $10. For all you know it could be $9,999.