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Paul Milgrom and Robert Wilson of American Stanford University were awarded the 2020 Nobel Prize in Economics for their work in the study of auction theory, the Royal Swedish Academy of Sciences announced Monday.
“This year’s winners have been studying how auctions work,” the Academy said in a statement. “They
He also used his findings to create new auction formats for goods and services that are difficult to
sell in a traditional way, like radio frequencies ”.
“The discoveries benefited sellers, buyers and taxpayers around the world,” he emphasized.
Paul Milgrom, born in 1948 in Detroit, has a Ph.D. from Stanford University (1979) and is currently the Shirley and Leonard Ely Jr. Professor of Humanities and Sciences at that institution. Robert Wilson, born 1937 in Geneva, USA, has a doctorate in management from Harvard University and is Distinguished Professor of Management, Emeritus, at Stanford University.
“People have always sold things at the best price or bought from the highest bidder. Today, objects worth astronomical amounts change hands every day at auctions, not just domestic art objects and antiques, but also titles, minerals and energy, ”said the Swedish academy.
Using auction theory, researchers try to see the results of different rules for bids and final prices, the format of the auction. “The analysis is difficult, since the bidders behave strategically based on the information available. They take into account what they know themselves and what they think the other bidders know. “
According to the academy, Robert Wilson developed the theory of auctions of objects with a common value, a value that is uncertain in advance but, in the end, is the same for everyone. Examples include the future value of radio frequencies or the volume of minerals in a given area.
“Wilson 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,” he said.
“Paul Milgrom formulated a more general auction theory that not only allows for common values, but also
private securities that vary from one bidder to another. He analyzed the bidding strategies in a series of auctions with known formats, showing that one format will give the seller more revenue when bidders learn more about the estimated values of others during the bidding process, ”he said.
Grooves and frequencies
Societies assign more and more complex objects between users, such as landing spaces and radio frequencies. In response, Milgrom and Wilson invented new formats to auction many interrelated objects simultaneously, on behalf of a seller motivated by broad social benefit rather than maximum income.
In 1994, US officials first used one of their auction formats to sell radio frequencies to telecommunications operators. Since then, many other countries have followed suit, recalled the royal academy.
“This year’s economics awardees started with the fundamental theory and then used the results in practical applications, which spread globally,” said Peter Fredriksson, Chair of the Awards Committee. “The discoveries are of great benefit to society.”
[Atualizada ás 11h30]
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