Paul R. Migrom Milgrom and Robert B. Wilson. Wilson was awarded the 2020 Swedish Central Bank Economic Science Award for “improvements in auction theory and inventions in new auction forms”.
Their theory improved the auction in practice.
This year’s winners, Migrom and Wilson, studied how auctions work. They also used their insights to design new forms of auctions, such as radio frequencies, for goods and services that were difficult to sell in the traditional way. Their findings benefit sellers, buyers and taxpayers around the world.
People always sell things to the highest bidder or buy them from the lowest bidder. Today, astronomically valuable items change hands at auction, not only household goods, art and antiques, but also securities, minerals and energy. Public purchases can also be made by auction.
Using auction theory, the researchers tried to understand the results of different bidding and final price rules, i.e. the form of auction. Analysis is difficult because the bidder’s behavior is strategic and based on the information available. They think about what they know and what they think other bidders know.
Wilson developed the theory of auctioning items of common value. The common value is uncertain before the auction, but in the end it is the same for everyone. For example, the future value of radio frequencies or the amount of minerals in a particular region. Wilson explains why rational bidders tend to set bids below their own best estimates of common values: they worry about the curse of winners – that is, overbidding and losing.
Migrom proposed a more general auction theory that allows not only auctions to share value, but also private values to be auctioned because of differences between different bidders. He analyzed bidding strategies in many well-known auction forms, proving that when bidders know more about each other’s valuations during the bidding process, one form of auction can bring higher expected revenue to sellers.
Over time, society has assigned users more and more complex items, such as landing points and radio frequencies. In response, Milgrom and Wilson invented a new way of auctioning many interrelated items at the same time, representing sellers motivated by broad social interests rather than the greatest income. In 1994, for the first time, the United States authorities used one of these auctions to sell radio frequencies to telecommunications operators. Since then, many other countries have followed suit.
“This year’s economic science winners start with basic theories and then apply their results to practice and spread them around the world. Their findings are of great benefit to society,” said Peter Fredriksson, chairman of the Nobel Committee.
Introduction to Milgrom.
Paul Milgrom: Professor at Stanford University, renowned for auction theory and mechanism design theory. He graduated from Stanford University in 1979 with a Ph.D. in Business and is currently a professor of anthropology and social sciences and economics at Stanford University. He also teaches at Harvard University and MIT. Professor Migrom is a member of the American Academy of Arts and Sciences and the American Society of Econometrics.
Professor Paul Milgrom has a wide range of research interests, including real-world auction design and other markets, organizational economics, limited rationality and economic history. His book Economics: Organization and Management (1992), co-authored with John Roberts, is a well-known textbook.
Professor Paul Milgrom also leads the team in designing channels and utility auction mechanisms for many countries, including the United States, Germany, Mexico and Canada.
In auction, Paul Milgrom, tenured professor of economics at Stanford University, is undoubtedly a name to be reckoned with. In 1993, Migrom was commissioned by former U.S. President Bill Clinton to participate in the (FCC) Federal Telecommunications Commission’s telecommunications operating license auction, the main design of the auction mechanism, so that the FCC auction was a great success, so Migrom became one of the world’s most well-known figures in the field of auction and industrial economics.
Professor Migrom, who has published his research in prestigious economic journals such as Amerian Economic Review and Econometrica, is now interested in incentive theory, planning, and auction market design. He is known for his work in spectrum auction design.
Professor Paul Migrom’s most recent book, Put Auction Theory and Practice, was published by Cambridge University Press in 2004 and is highly regarded for its combination of auction theory and practice.
Robert Wilson received his Ph.D. in Business Administration from Harvard University in 1963. Wilson was elected Fellow of the American Academy of Sciences (1994) and President of the World Institute of Econometrics (1999). He is currently a professor at Stanford Business School.
Its research and teaching involves market design, pricing, negotiation, and related topics related to industrial organization and information economics. He is an expert in game theory. As one of the early representative figures of industrial organization theory, he made outstanding contributions in the fields of price theory and market design.
Robert Wilson’s research interests and contributions.
Since the 1970s, Wilson has been engaged in game theory research and has made important contributions, especially the concept of sequentemary equilibrium (Kreps and Wilson 1982), which he proposed with Kreps, which is an important breakthrough in the concept of solutions to incomplete information dynamic games.
Since the 1980s, Wilson has made important achievements in the theory and application of auction mechanism design, and has become an authoritative scholar of auction and bidding mechanism design in the fields of telecommunications, transportation and energy. In 1993, Wilson’s collection of price mechanisms, Nonlinear Pricing, was published by Oxford University Press, which produced an encyclopaedic analysis of utility-related topics such as rate design and telecommunications, transportation and energy.
The Prize in Economics, one of the “youngest” disciplines in the Nobel family, was founded in 1968 and has been awarded annually since 1969, while other prizes (physics, chemistry, physiology or medicine, literature, and peace) have been awarded since 1901 shortly after the death of Alfred Nobel, the founder of the Nobel Prize.
A more accurate name for the Nobel Prize in Economics is the Swedish Central Bank’s commemoration of the Alfred Nobel Prize in Economics, which recognizes scholars who have made important contributions to the field of economics. The money comes from Sweden’s central bank in the same amount as other Nobel prizes.
The Prize in Economics was not established on the basis of Alfred Nobel’s will, but is similar to the Nobel Prize in terms of selection steps and award ceremonies.
The award of the economics prize is often questioned as a violation of the Requirements of the Nobel Will to “make a great contribution to all mankind”. Because the contributions of economists do not necessarily match, and the most award-winning neoclassical schools do not have a “knowledge system for dealing with financial disasters”.
As early as 2001, members of the Nobel family publicly criticized the Nobel Prize in Economics in the Swedish daily, arguing that the creation of the Nobel Prize in Economics had lowered the profile of the Nobel Prize.
Since 1969, the Nobel Prize in Economics has been awarded 51 times, with 84 winners. The Nobel Prize is limited to a maximum of three persons, with only one winner awarded 25 of the 51 awards in economics, two winners 19 times and three winners seven times.
So far, two women have won economic science awards: Elinor Ostrom in 2009 and Esther Duflo in 2019.
The youngest ever winner of the economics prize was Esther Duflo, who was 46 at the time.
Leonid Hervey, who was 90 when he won the Nobel Prize in economics, is the oldest ever winner of the prize.