A sealed first-price auction
is a form of auction
where bidders submit one bid in a concealed fashion. The submitted bids are then compared and the person with the highest bid wins the award, and pays the amount of his bid to the seller. This differs from a standard English auction
in that bids are not open or called; bidders must submit valuations based upon supposed market value
and their own willingness to pay
— as opposed to engaging in competition
through relative prices with other bidders. Other forms of auction include the second price auction
, where the highest bidder wins but pays only the second-highest bid.
This type of auction is used at the London Gold Exchange and is the most obvious way for a business to auction off goods.