> 6. Ad-exchange receives all the bids and picks the second highest bidder (no idea why it's the second highest)
It's called a Vickrey Auction. It allows bidders to bid their true value (instead of trying to outbid all of the other bidders, as is what results from a first-price auction).
It's called a Vickrey Auction. It allows bidders to bid their true value (instead of trying to outbid all of the other bidders, as is what results from a first-price auction).
https://en.wikipedia.org/wiki/Vickrey_auction