the price of the second highest bid. The Vickrey auction is intended to prevent the incentive for buyers to bid strategically, due to the fact it requires them to speak the truth by giving their true value of the item. If a bidder makes a very high bid, they may have to pay that price, but if they make a low bid there is a chance that they will lose the item. Therefore, the winner is the person who values the item the highest. It's a win-win situation for both the seller and the winner. Vickrey auctions, however, are not suitable for all auctions since perishable items such as seafood and flowers must be sold in time. Reverse auction Reverse auctions are where the roles of buyer and seller are reversed. Multiple sellers compete to obtain the buyer's business, and prices typically decrease over time as new offers are made. They do not follow the typical auction format in that the buyer can see all the offers and may choose which they would prefer. Reverse auctions are used predominantly in a business context for procurement. Reverse auctions bring buyers and sellers together in a transparent marketplace. The practice has even been implemented for private jet travel on the online auction site Marmalade Skies. The term reverse auction is often confused with unique bid auctions which are more akin to traditional auctions, as there is only one seller and multiple buyers. However, they follow a similar price reduction concept except the lowest unique bid always wins and each bid is confidential. Bidding fee auction A bidding fee auction (also known as a penny auction) requires customers to pay for bids, which they can increment an auction price one unit of currency at a time. On English auctions for example, the price goes up in 1 pence (0.01 GBP) increments. There has been criticism that compares this type of auction to gambling, as users can spend a considerable amount of money without receiving anything in return (other than the spent bids trying to acquire the item). The auction owner (typically the owner of the website) makes money in two ways: the purchasing of bids, and the actual amount made from the final cost of the item. Legalities Shill bidding Shill bidding is the most prominent type of online auction fraud where sellers submit bids to increase the price of an item without