A Vickrey auction is a type of sealed-bid auction where bidders submit their bids without knowing the others' offers. The highest bidder wins, but they pay the price of the second-highest bid. This format encourages bidders to bid their true value for the item, as they won't pay more than necessary. This auction format was named after William Vickrey, a Canadian economist who won the Nobel Prize in Economic Sciences in 1996. Vickrey auctions are often used for selling goods or services where transparency and fairness are essential, such as in government contracts or public resources.