[thisAintNoGame]

Witholding the top bid (except to those who are interested) means buyers offer what they think the item is worth - which could be a lot more than top bid + 1$.

That's not true. I'm not going to put down what I believe the item is worth because then you will charge me that amount. If I believe this item is worth 100 and you charge me 100, I get a final value of 0. What I actually do is bid under my value and its not exactly clear what I do.

If you sell the item to the guy who bids the highest but charge him the second highest bid (known as the 2nd price auction), then people are incentivized to bid what they think the item is worth.

I'm not claiming that you should necessarily do any particular auction format because the theoretical results are for scenarios that typically dont hold in practice. However, I do recommend reading a bit about auction theory to help guide your decisions.

Good luck!