The difference between a Vickrey Auction (second price sealed auction) and a first price sealed auction is that the highest bidder in a Vickrey Auction wins but only pays the second highest bid, whereas the highest bidder in a first price sealed auction wins but pays the highest bid.

The Vickrey auction was used for stamp auctions as early as 1893, hence the name philatelist's auction.

This type of auction was first proposed academically in 1961 by Professor William Vickrey, the 1996 Nobel Prize winner in economics. Vickrey's paper discusses a single, indivisible lot being auctioned off, in which case the term "Vickrey auction" is used interchangeably with the term "second-price sealed auction," which has the same meaning. Thus, the Vickrey auction is also known as the second-price sealed auction.