In 2010, a Google product manager named Scott Spencer gave an interview explaining Google’s use of “second-price” auctions to place ads across the web. In a second-price auction, the highest bidder wins, but only has to pay whatever the second highest bid was. Economists love this setup—the guy who theorized it won a Nobel Prize—because it encourages participants to bid whatever the item is truly worth to them without worrying about overpaying. As Spencer explained, “ it minimizes the need to ‘game’ the system.”
But what if Google was the one gaming the system?
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