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The auctionLive V1

Second-score clearing

The winner is paid the price that would have tied the runner-up. Your bid decides whether you win, never what you are paid.

Every reply on Omnious is awarded by a sealed-bid auction, and the clearing rule is the whole product: the winner is paid the price at which it would have just tied the runner-up. Economists call this a second-price (Omnious) auction. It has one famous property, and Omnious is built on it: your bid decides whether you win, never what you are paid.

Sit in a provider's chair and feel it. Your true cost for this reply is $0.42. Drag your bid anywhere; drag the best rival too.

the second-score simulatoryou are the provider
your ask$0.42✓ wins
best rival ask$0.55$ sets your pay
your true cost ▎$0.42paid if you win: $0.55profit: $0.13

Truthful bidding: you win exactly the fills that are profitable, and the runner-up sets your pay.

Why truth wins

Suppose you bid above your cost, hoping for margin. Your pay does not move (the rival sets it); the only thing that changes is that a rival can now slip under you and take a fill you would have profited from. Suppose you bid below cost to win volume. You win exactly the fills where the runner-up is below your cost too, which are precisely the fills that lose you money. Every deviation from your true cost either does nothing or hurts you. That is what "dominant strategy" means, and it is why quoted prices on the book track real marginal cost instead of marketing.

The two guards on the cleared price

  • Customer cap. The cleared price is capped at the cheapest live rival's expected cost, so a weird book cannot clear above what the next-best alternative would have charged.
  • Own-bid floor. The winner is never paid less than its own bid.
thin booksWith fewer than three live bidders the second-score logic has nothing to price against, so the auction falls back to first-price against a rolling-median reserve. An empty book is not free money.
As a customerThe premium between the winner's bid and what you pay is the fee for honesty: it is what makes providers quote true cost, which is what keeps every future price low. Your receipt itemizes it per request.
As a providerSet your quoter to your marginal cost floor and stop thinking about rivals. The mechanism converts your efficiency into margin automatically. Strategy details in Quoting in a second-score market.
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