Paul R Milgrom and Robert B Wilson of the United States won the 2020 Nobel Prize for economics for improvements to auction theory and inventions of new auction formats.
“This rear Launcates, Paul Milgrom and Robert Wilson, have studied how cructions work. They have also used their insights to design new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies. Their discoveries have benefitted sellers, buyers and taxpayers around the world,” said the Royal Swedish Academy of Sciences said.
Robert Wilson developed the theory for auctions of objects with a common value a value which is uncertain beforehand but in the end, is the same for everyone. Examples include the future value of radio frequencies or the volume of minerals in a particular area. Wilson showed why rational bidders tend to place bids below their own best estimate of the common value: they are worried about the winners! curse that is about paving too much and losing out, the academy said.
Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder, the Nobel academy said. He analysed the bidding strategies in a number of well-known auction formats. demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding.
This year’s Laureates in Economic Sciences started out with fundamental theory and later user their results in practical applications, which have spread globally. Their discoveries are of great benefit to society,” says Peter Fredriksson, chair of the Prize Committee.
Paul R Milgrom was born in 1948 in Detroit, USA. He graduated from the University of Michigan in 1970 with an AB in Mathematics. He worked as an actuary for several years in San Franciso at the Metropolitan Insurance Company and then at the Warren consultancy in Columbus, Ohio. Milgrom became a fellow of the Society of Actuaries in 1974. In 1975, Milgrom enrolled for graduate studies at Stanford university in the MBA programme. He got his PhD in 1979 from Stanford University, Stanford, USA. He is the Shirley and Leonard Ely Professor of Humanities and Sciences at Stanford University. He has held this position since 1987. He is an expert in game theory, especially auction theory and pricing strategy
Robert B Wilson was born on May 16, 1937. He is the Adams Distinguished Professor of Management, Emeritus at Stanford University. Wilson is known for his contributions to management science and business economics. His doctoral thesis introduced sequential quadratie programming, which became a leading iterative method for nonlinear programming. Wilson is known for research and Teaching on market design, pricing, negotiation, and related toples concerning industrial organization and information economies. He is an expert on game theory and its applications