Auctions can be conducted as either "sealed-bid" or "open," with the difference boiling down to relative information advantage. In a "sealed-bid" auction, each bidder knows only the price and size of his or her bid; the auctioneer, meanwhile, knows the price and size of every bid and therefore has a better sense of aggregate demand than any bidder. In an "open" auction, each bidder sees the same picture of demand as the auctioneer—a factor that, at least in theory, reduces the impact of the winner's curse (bidders know aggregate demand at each price, so they can factor this into their own bidding behavior, and thus feel less like they got snookered).

Open auctions can be conducted as either "ascending" ("English") or "descending" ("Dutch"). In an ascending auction—common in the art world—the price rises until supply meets demand. In the descending version, the price starts high and drops. In a "single-unit" ascending auction (of a painting, for example), the auction ends when the price reaches a level at which only one bidder remains; in a single-unit descending auction, the auction ends with the first bid. In "multiple-unit" auctions (such as IPOs), prices continue to increase or decrease until all units are sold. Google's auction is actually not a "Dutch" auction; it is a "Vickrey" auction.

The last major auction variation, used with multiple-unit auctions, is "uniform price" or "discriminatory" (aka, "pay-what-you-bid"). In a "uniform price" auction, all winning bidders pay the same price. In a "discriminatory" auction, each winning bidder pays what he or she bid. The discriminatory method encourages accurate bidding, but it also leads to some bidders paying more than others, creating a sense of unfairness. The uniform-price method avoids this pitfall, but encourages bidders to overbid, knowing that they will only end up paying the final offer price. The auction may feel fairer, but the logic—"it makes sense to overbid"—can drive demand higher than market equilibrium (and, therefore, in the case of an IPO, set the stage for a post-IPO crash).

Google's auction is, as planned, a sealed-bid, uniform price auction. Bidders will know only what they have bid and will therefore have little insight into overall market demand (thus, in theory, increasing the potential impact of the winner's curse). Google has suggested that, if the clearing price significantly exceeds the initial price range, it may raise the range (as is typical in a standard IPO). Doing so would transmit market information to bidders, and, therefore, theoretically reduce the impact of a winner's curse. Uniform-pricing will ensure that all winners pay the same price, but it will also probably encourage overbidding and "free-riding" (bidding by lazy or unsophisticated investors who, knowing that they'll pay the same price as well-informed investors, bid high to get shares). Google's decision to retain the ability to throw out "speculative" bids, however, should rein in this tendency.