You have the winning bid at a second-price auction for inventory in Display & Video 360, at $12. The second-highest bidder bids $8. How much will you pay for these impressions?

In a second-price auction, the winner pays a small increment above the second-highest bid. This mechanism encourages bidders to bid their true valuation for the inventory. In this scenario, the winning bid is $12, and the second-highest bid is $8. Therefore, you will pay $8.01 for the impressions. Paying $12.00 or $12.01 would be incorrect as that would imply a first-price auction or an unnecessary overpayment. Paying $8.00 would mean you pay exactly the second-highest bid, which isn't how second-price auctions typically work; there's usually a minimal increment.