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The winners of this year’s economics award are rewarded for their studies in auction theory. The research has also been used by Americans Paul R Milgrom and Robert B Wilson to design new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies.
“The discoveries have benefited sellers, buyers and taxpayers around the world,” writes the Royal Swedish Academy of Sciences in motivation.
After the announcement Robert B Wilson was present at the press conference by telephone. Monday’s message was very gratifying, the American said.
Despite his field of research, Wilson acknowledged that he has limited auction experience.
– I’ve probably never participated in an auction for my part. My wife says we bought ski boots on Ebay, it was an auction.
In his research he has Robert B Wilson developed a theory for auctions of common valuables. This could be, for example, radio frequencies or the amount of minerals in an area.
He also explained why rational bidders often bid lower than they estimate the common value to be – they want to avoid making a losing deal and paying a premium for the item.
Paul R Milgrom analyzed the behavior of bidders in several common auction formats. In his studies, he was able to show that the seller’s expected revenue increases in a format in which bidders learn more about how others value the item.
Based on the findings of the studies, the Americans developed new formats for auctions. In 1994, the US authorities used one of its formats for the first time when radio frequencies were sold to telecommunications operators. Several other countries have followed suit since then.
– This year’s economics laureates have devoted themselves to theoretical basic research and have themselves used the results in practical applications that have gained worldwide distribution. His discoveries have been of great benefit to society, says the award committee chairman Peter Fredriksson in a press release.
The Riksbank Prize for Economics has been awarded since 1969 by the Royal Swedish Academy of Sciences. So far, 84 people have received the award, of which 82 are men. In 2009, Elinor Ostrom became the first woman to receive the award.
The 2019 Economics Award went to Michael Kremer, Esther Duflo and Abhijit Banerjee for their research on poverty reduction. Esther Duflo, who was 46 years old at the time, became the youngest award winner in history.
Read more:
Carl Johan von Seth: The World’s Largest Auction Solution May Receive This Year’s Economic Prize
Mikael Holmqvist: Is the “Nobel Prize in Economics” really a wise investment for the future?
