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As I understand and have read the advantage of the 2nd price auction is that it encourages bidder to bid for 'true value', which I think can also be done with the 1st price sealed bid auction. I might be wrong, but I want to understand which one is better and why.

If the explanation can be made in terms of auction process for online ads (google use 2nd PA for ads), that'll be wonderful.

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    $\begingroup$ Better in what sense? In theory they should produce similar expected results, with the first price sealed bids being shaded down by the bidders. Second price auctions can encourage honest bidding, but can be disastrous for the seller if there is only one bidder $\endgroup$
    – Henry
    Apr 23 '19 at 19:09
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    $\begingroup$ The generalized second price auction that Google uses to sell ads is not incentive compatible (i.e. non-truth telling) as in the second price sealed bid auction. $\endgroup$
    – Herr K.
    Apr 23 '19 at 19:09
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    $\begingroup$ Related / possible duplicates: economics.stackexchange.com/q/24361/42, economics.stackexchange.com/q/4524/42 $\endgroup$
    – Herr K.
    Apr 23 '19 at 19:18
  • $\begingroup$ "encourages bidder to bid for 'true value', which I think can also be done with the 1st price sealed bid auction." How so? Please elaborate. Also answer Henry's comment, because current question seems unclear. $\endgroup$
    – Giskard
    Apr 23 '19 at 19:59

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