The 2020 Nobel Prize in Economic Sciences has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements in auction theory and inventions of new auction formats.”
The Nobel Prize Committee took to Twitter to announce the winner: “The 2020 Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel has been awarded to Paul R. Milgrom and Robert B. Wilson for improvements in auction theory and inventions. of new auction formats’. “
“This year’s economics honorees started with fundamental theory and then used their results in practical applications, which have spread around the world. Their discoveries are of great benefit to society, “says Peter Fredriksson, Chairman of the Prize Committee.
Robert Wilson, recipient of this year’s Economics Prize, showed why rational bidders tend to place bids below their best estimate of common value: They are concerned about the winner’s curse, that is, paying too much and losing. .
2020 Economics Laureate Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder.
This year’s economics laureates, Paul Milgrom and Robert Wilson, have not only clarified how auctions work and why bidders behave in certain ways, but they have used their theoretical insights to invent entirely new auction formats for auction. sale of goods and services.
Some facts about this year’s winners
- Paul R. Milgrom, born 1948 in Detroit, United States.
- Doctor. 1979 from Stanford University, Stanford, USA Shirley and Leonard Ely Jr. Professors of Humanities and Sciences, Stanford University, USA.
- Robert B. Wilson, born 1937 in Geneva, United States.
- DBA 1963 from Harvard University, Cambridge, United States. Adams Distinguished Professor of Management, Emeritus, Stanford University, USA.
What you need to know about ‘auction theory’
The outcome of an auction (or acquisition) depends on three factors: the first is the rules or format of the auction. Are the tenders open or closed? How many times can participants bid in the auction? What price does the winner pay, his own bid or the second highest bid? The second factor is related to the auctioned item. Does it have a different value for each bidder or do they value the object in the same way? The third factor refers to uncertainty. What information do the different bidders have about the value of the object?
Using auction theory, it is possible to explain how these three factors govern the strategic behavior of bidders and, therefore, the outcome of the auction. Theory can also show how to design an auction to create as much value as possible. Both tasks are particularly difficult when several related items are auctioned at the same time. This year’s Laureates in Economics have made auction theory more applicable in practice by creating new tailored auction formats.
The Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel has been awarded 51 times to 84 laureates between 1969 and 2019.
The Nobel Prize, which consists of a gold medal, a diploma and a check for 10 million Swedish crowns ($ 1.1 million, 950,000 euros), will be shared equally among the winners.
In 2019, the partners and married couple Esther Duflo and Abhijit Banerjee received the news that they had been awarded the 2019 Prize in Economics. They became the fifth couple to share an award.
2020 Nobel Prize winners
This year’s ceremony has been shortened due to the new coronavirus pandemic.
- On Monday, the Nobel Committee awarded the physiology and medicine prize for discovering the hepatitis C virus that devastates the liver.
- Tuesday’s physics award honored advances in understanding the mysteries of cosmic black holes.
- Emmanuelle Charpentier from France and Jennifer Doudna from the United States shared the chemistry award on Wednesday.
- On Thursday, American poet Louise Gluck won the literature award for her “sincere and uncompromising” work.
- On Friday, the 2020 Nobel Peace Prize was awarded to the 2020 Nobel Peace Prize awarded to the World Food Program (WFP).
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