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TheOtherDave comments on Open Thread, June 2-15, 2013 - Less Wrong Discussion
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Well, yes, technically that's true... but what prevents/discourages gwern (or his accomplice) from submitting an $N-1 bid (where N is the current sole bid amount)?
Typically, second-bid auctions are sealed, and all opened at once at the end of the auction, so it won't be known that JohnWittle has bid, or how much he has bid, until the auction is over.
Ah. (nods) That makes sense.
If I were going to do that, I would simply have set a reserve price.
Not the same thing, surely? Submitting an N-1 bid causes the top bidder to pay effectively their bid... in effect turning a second-bid auction into an English auction as defined above. Setting a reserve price sets a floor that has no relationship to the top bidder's bid.
But sure, the fact that you didn't set a reserve price also suggests that you wouldn't take advantage of this loophole in your counterfactual second-bid auction.