Auctions are an integrated part of a lot of fantasy baseball leagues. Many drafts are arranged as auctions in which owners engage in bidding wars to acquire players. This is typically done in the form of a so-called English auction, where one owner announces a starting bid and others then beat that amount incrementally. However, auctions are also sometimes used when deciding the distribution of free agent players. Normally these auctions are sealed-bid auctions, in which every owner only gets to submit one bid without having any knowledge about the actions of the others.
This article seeks to describe a certain type of sealed-bid auction, namely Vickrey auctions (also known as second-price sealed-bid auctions). In regular sealed-bid auctions the winner of the prize (i.e. the fantasy player) is simply the owner with the highest bid, and the price he has to pay equals his bid. This, however, opens the door for speculation. The simple rules of Vickrey auctions erase the incentive to not bid according to your true evaluation of the player.