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How do people get the largest return by selling their service to the what bidder?


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In theory, people get the largest return by selling their service to the highest bidder.  This is because auctions are supposed to allow people to state what they would actually pay for your services, rather than having you set a price that might be lower than they are willing to pay.

Let us imagine that you are selling some kind of service.  You place an ad saying that you will provide your service for $40 per hour.  You get a number of people who buy your service, but you do not know how many of those people would have bought your service if the price had been higher.  If you have an auction where you sell to the highest bidder, you avoid this problem.   In an auction, people have to bid for your services.  They have to compete for your service, so they have to think about how much it is really worth to them.  They will set a value on it and bid up to that value.  When this happens, you get a better return than you would if you had just set your price and sold to whoever was willing to buy at that price.

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