Another method for tapping individual willingness to pay is auctions. The auction mechanism of eBay is set up so that every bidder submits his or her maximum price , but without the other bidders seeing it. If the bidder wins, he or she pays only the price of the next highest bidder plus a slight differential. This method is known as a Vickrey auction in which it is optimal for the bidder to reveal his or her maximum price.2
