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Paul R. Milgrom and Robert B. Wilson won the 2020 Riksbank Prize for Economic Sciences,In recognition of his “improvement of auction theory and the invention of new auction formats.”
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His theory improves the auction in practice.
This year’s winners, Miguel Rom and Wilson, studied how auctions work. They also used their knowledge to design new auction formats for goods and services that are difficult to sell in the traditional way, such as radio frequencies. His findings benefit sellers, buyers, and taxpayers around the world.
People always sell things to the highest bidder or buy from the highest bidder. Today, items of astronomical value change hands at auctions every day, including not only household items, art and antiques, but also securities, minerals, and energy. Public procurement can also be done through auctions.
Using auction theory, researchers try to understand the results of different bidding rules and final price, that is, the auction format. The analysis is difficult because the behavior of the bidders is strategic and based on the information available. They will consider what they know and what they think other bidders know.
Wilson developed the theory of auctions for items of common value. The common value is uncertain before the auction, but in the end it is the same for everyone. For example, the future value of radio frequency or the amount of minerals in a particular area. Wilson explained why rational bidders often set their bids below their own best estimate of common value – they worry about the winner’s curse – that is, bids too high and fail.
Migrom proposed a more general auction theory that not only allows common value auction, but also allows private value auction, because there are differences between different bidders. He analyzed bidding strategies in many popular auction formats and demonstrated that when bidders learn more about valuing others during the bidding process, an auction format will generate higher expected revenue for sellers.
Over time, society has assigned users increasingly complex elements, such as landing sites and radio frequencies. In response, Milgrom and Wilson invented a new way to auction many interrelated items at the same time, representing the seller’s motives for broad societal interests, not higher revenues. In 1994, the US authorities used one of the auction methods to sell radio frequencies to telecommunications operators for the first time. Since then, many other countries have followed suit.
“This year’s economics science winners started with basic theories and then applied their results to practice and disseminated them around the world. Their findings are of great benefit to society,” said Peter Fredericksson, Chairman of the Prize Committee. Nobel. (Peter Fredriksson) said.
About Milgrom
Paul Milgrom (Paul Milgrom) – a professor at Stanford University, has a good reputation in auction theory and mechanism design theory. He graduated from Stanford University in 1979 with a doctorate in business, and is currently Professor of Anthropology and Social Sciences and Professor of Economics at Stanford University. He also teaches at Harvard University and MIT. Professor Migrom is a fellow of the American Academy of Arts and Sciences and the American Econometric Society.
Professor Paul Milgrom has a wide range of research fields, including auction design in the real world and other markets, organizational economics, bounded rationality, and economic history. He and John Roberts (John Roberts) were co-authors of “Economics: Organization and Management” (Economics, Organization and Management) (1992) is a very famous textbook.
Professor Paul Milgrom also led the team to design public service auction channels and mechanisms for many countries, including the United States, Germany, Mexico, and Canada.
In the field of auctions, Paul Milgrom, Senior Lecturer in Economics at Stanford University, is certainly a name that cannot be ignored. In 1993, Migrom accepted the commission of former US President Clinton to participate in the auction of telecommunications operating licenses of the Federal Telecommunications Commission (FCC). He ingeniously completed the main design of the auction mechanism and made the FCC auction a great success. , Migrom became one of the best known figures in the field of global auctions and industrial economics.
The results of Professor Migrom’s research have been published in well-known economic journals such as Amerian Economic Review and Econometrica. His current research interests are incentive theory, planning and auction market design. He is well known for his work on spectrum auction design.
Professor Paul Migrom’s recent book “Putting Auction Theory into Practice” was published by Cambridge University Press in 2004, combining the theory and practice of auctions, and is highly regarded.
Wilson Profile
Robert Wilson received his doctorate in business administration from Harvard University in 1963.. Wilson was elected to the American Academy of Sciences (1994) and president of the World Econometric Society (1999). The current professor at the Stanford University School of Business.
His research and teaching involve market design, pricing, negotiation, and issues related to industrial organization and the information economy. He is an expert in game theory. As one of the first representatives of the theory of industrial organization, he made outstanding contributions in the fields of price theory and market design.
Research fields and contributions of Robert Wilson
Since the 1970s, Wilson has been researching game theory and has made important contributions, especially the concept of sequential equilibrium (Kreps & Wilson 1982) proposed by him and Kreps, which is a concept for the solution of dynamic games of incomplete information. An important advance.
Since the 1980s, Wilson’s research on the theory and application of auction mechanism design has achieved important results, and he has become an expert in auction and tender mechanism design in the fields of telecommunications, transportation and energy. In 1993, Oxford University Press published Wilson’s research on the pricing mechanism, “Nonlinear Pricing.” This book carried out an encyclopedic analysis of the design of tariffs and issues related to public services, such as telecommunications, transportation and energy. Authorized works have earned him great honors.
The Economics Prize is the “youngest” academic award in the Nobel Prize family. It was founded in 1968 and has been awarded annually since 1969. Other awards (physics, chemistry, physiology or medicine, literature, peace) In 1901, Alfred Nobel (Alfred Nobel), the founder of the Nobel Prize, began receiving awards shortly after his death.
The more accurate name of the Nobel Prize in Economics is: The Riksbank Memorial Alfred-Nobel Nobel Prize in Economics, used to recognize academics who have made important contributions in the field of economics. Funding comes from the Riksbank and the amount is the same as other Nobel laureates.
The Economics Prize is not based on the will of Alfred Nobel, but is similar to the Nobel Prize in terms of selection procedures and award ceremony.
The awarding of economics prizes is often questioned as a violation of the Nobel’s will to “make a great contribution to all mankind.” Because the contributions of economists may not match the name, and the neoclassical school that has won the most awards does not have a “knowledge system for dealing with financial disasters.”
As early as 2001, members of the Nobel family have publicly criticized the Nobel Prize in Economics in the “Swedish Journal”, believing that the establishment of the Nobel Prize in Economics has reduced the style of the Nobel Prize.
Since 1969, the Nobel Prize in Economics has been awarded 51 times and has been won by a total of 84 people. The Nobel Prize stipulates that a maximum of three people can be awarded. Of the 51 financial awards, only one winner was awarded 25 times, two winners were awarded 19 times, and three winners were awarded 7 times.
So far, two women have won economics awards, namely Elinor Ostrom in 2009 and Esther Duflo in 2019.
The youngest winner of the Economics Prize in history is Esther Duflo (Esther Duflo), who was only 46 years old.
Leonid Hevich was 90 years old when he won the Nobel Prize in Economics and was the oldest economic prize winner in history.
