Why does such a system encourage bidders to bid honestly


Problem

Consider the following proposed system of bidding: The contract would be awarded to the lowest bidder at the price bid by the second-lowest bid. Why does such a system encourage bidders to bid honestly their true costs of production?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.

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Microeconomics: Why does such a system encourage bidders to bid honestly
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