A Vickrey auction or sealed-bid second-price auction (SBSPA) is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest bid. This type of auction is strategically similar to an English auction and gives bidders an incentive to bid their true value. The auction was first described academically by Columbia University professor William Vickrey in 1961 though it had been used by stamp collectors since 1893. In 1797 Johann Wolfgang von Goethe sold a manuscript using a sealed-bid, second-price auction.

Vickrey's original paper mainly considered auctions where only a single, indivisible good is being sold. The terms Vickrey auction and second-price sealed-bid auction are, in this case only, equivalent and used interchangeably. In the case of multiple identical goods, the bidders submit inverse demand curves and pay the opportunity cost.

Vickrey auctions are much studied in economic literature but uncommon in practice. Generalized variants of the Vickrey auction for multiunit auctions exist, such as the generalized second-price auction used in Google's and Yahoo!'s online advertisement programs (not incentive compatible) and the Vickrey–Clarke–Groves auction (incentive compatible).

In a Vickrey auction with private values each bidder maximizes their expected utility by bidding (revealing) their valuation of the item for sale. These types of auctions are sometimes used for specified pool trading in the agency mortgage-backed securities (MBS) market.

The dominant strategy in a Vickrey auction with a single, indivisible item is for each bidder to bid their true value of the item.

Let ${\displaystyle v_{i}}$ be bidder i's value for the item. Let ${\displaystyle b_{i}}$ be bidder ${\displaystyle i{\text{'s}}}$ bid for the item. The payoff for bidder ${\displaystyle i}$ is

The strategy of overbidding is dominated by bidding truthfully (i.e. bidding ${\displaystyle v_{i}}$). Assume that bidder ${\displaystyle i}$ bids ${\displaystyle b_{i}>v_{i}}$.

Thus the strategy of bidding higher than one's true valuation is dominated by the strategy of truthfully bidding. The strategy of underbidding is also dominated by bidding truthfully. Assume that bidder ${\displaystyle i}$ bids ${\displaystyle b_{i}<v_{i}}$.