A second price auction is a type of bidding process in which the highest bidder wins the item or service being auctioned, but only pays the amount of the second highest bid. This means that the winning bidder pays less than their own bid, resulting in a potentially lower price for the item. This type of auction is commonly used in online marketplaces and is also known as a Vickrey auction. Unlike traditional auctions where the winning bidder pays the amount they bid, a second price auction encourages bidders to bid their true valuation of the item, as they will only pay the amount of the second highest bid. This can lead to a more efficient and fair outcome for both the buyer and the seller.