A second-price auction is a type of auction where the highest bidder wins but pays the price of the second-highest bid. This format encourages bidders to bid their true value for the item, as they know they will only pay the amount of the next highest bid, not their own. This auction style is commonly used in online advertising and can lead to more honest bidding behavior. It reduces the incentive for bidders to underbid or overbid, making the auction process more straightforward and efficient for both buyers and sellers.