American Economists Paul Milgrom and Robert Wilson were awarded the Nobel Prize in Economics 2020 for their work in the “improvements to auction theory and inventions of new auction formats.”
BREAKING NEWS:
The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats.”#NobelPrize pic.twitter.com/tBAblj1xf8— The Nobel Prize (@NobelPrize) October 12, 2020
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.
On the other hand, 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. He analyzed 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.
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.
The winners were announced in Stockholm by Goran Hansson, secretary-general of the Royal Swedish Academy of Sciences.
Technically known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the award was established in 1969 and comes with a 10-million krona ($1.1 million) cash prize and a gold medal.