This year’s economics honorees, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefiting sellers, buyers and taxpayers around the world, ”said the academy.
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.”
“Auctions are everywhere and they affect our daily lives. This year’s economics honorees, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefiting sellers, buyers and taxpayers around the world, ”said the academy.
Robert Wilson developed the theory of auctioning objects with a common value – a value that is uncertain in advance but, in the end, is the same for everyone. Wilson showed why rational bidders tend to bid below their best estimate of common value: they are concerned about the winner’s curse – that is, about paying too much and losing.
Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from one bidder to another. He analyzed the bidding strategies in several well-known auction formats, demonstrating that one format will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding.
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The award culminates a week of Nobel prizes and is technically known as the Sveriges Riksbank Prize in Economics in Memory of Alfred Nobel. Since its inception in 1969, it has been awarded 51 times and is now widely considered one of the Nobel Prizes.
Last year’s award went to two researchers from the Massachusetts Institute of Technology and a third from Harvard University, for their pioneering research on efforts to reduce global poverty.
The prestigious award comes with a cash prize of 10 million crowns ($ 1.1 million) and a gold medal.
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, and Wednesday’s chemistry award went to the scientists behind a powerful gene-editing tool.
The literature prize was awarded to American poet Louise Gluck on Thursday for her sincere and uncompromising work. The World Food Program won the Nobel Peace Prize on Friday for its effort to combat hunger around the world.
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