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This year’s Nobel Prize-winning economics experts started with a fundamental theory and then used the results in practical applications, helping to spread it around the world. Their findings are of great benefit to society.
Peter Fredriksson, Chairman of the Nobel Prize Committee
This year’s award-winning economists have been studying how the auction market works. They also use their knowledge to design new auction models for goods and services that are difficult to sell in the classic way, such as radio.
Traders, buyers and tax authorities around the world benefit from these contributions.
Since everyone wants to sell at a higher price and buy the cheapest, now everything goes through an auction. In this way, not only household items, antiques or works of art can be traded, but also stocks, minerals and energy.
Using auction theory, researchers have attempted to understand the consequences of various pricing and closing rules.
Economist Robert Wilson developed the auction logic for items of common value, which are values that are not determined initially but are agreed upon by everyone after closing.
Usually the price of the futures contract for radio waves or ore production in a particular location. Auctioneers often offer lower prices than they estimate, Wilson showed.
As society gradually developed, more complex goods emerged, such as locations in the parking lot of an airplane.
To satisfy the need to price them, economists Paul R. Milgrom and Robert B. Wilson created a new form of auction in which several related goods are simultaneously auctioned.
This method is based on the theory that sellers are motivated by social interests greater than maximum sales.
In 1994, the United States was the first to use a mechatronic method to sell radio waves to telecommunications operators. Since then, many other countries have adopted this approach.
The Nobel Prize in economics is officially called the Swedish Bank Prize for economics in honor of the Nobel.
The Nobel Prize in Economics is often awarded for research on inequality, economic psychology, auction models, economic health, or the job market. This is the last award in this year’s Nobel season.
In 2019, three economists were awarded the Nobel Prize in Economics for conducting research aimed at improving global poverty.
Economists Abhijit Banerjee, Esther Duflo and Michael Kremer say their research aims to “ensure that the fight against poverty is scientifically based.”
Summary of the Nobel Prize 2020
