Nobel Prize in Economics to Paul Milgrom and Robert Wilsom, for the theory of auctions

Paul R. Milgrom and Robert B. Wilsom

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12 October 2020The 2020 Nobel Prize in Economics was awarded to Paul R. Milgrom and Robert B. Wilsom, for "improving auction theory and inventing new auction formats".

This was announced by the Swedish Academy. 

Paul Milgrom and Robert Wilson, 72 and 83, are two US auction economists.

They gained recognition for improving auction theory that deals with how people behave in auction markets that "affect our daily lives" and "inventing new auction formats for goods and services that are difficult to sell in the traditional way. , such as radio frequencies, to the benefit of sellers, buyers and taxpayers around the world. "

Paul Robert Milgrom and Robert Wilson are both Stanford University professors.

, born in 1937, is an emeritus and distinguished professor of Management.

He has made important contributions to management science and business economics.

He also participated in the reformulation of the industrial organization with non-cooperative game theory.

Wilson developed a theory for the auction of objects with a common value (the one that is uncertain before the auction but the same for all at the end): examples are the value of radio frequencies or the volume of a mineral in a given area.

Wilson showed how rational pointers tended to bid at their highest for the common value estimates: are concerned, that is, the 'winner's curse', the

, which is to pay too much and lose substantially.

His research in non-linear pricing has particularly influenced the energy industry, and he was the speaker at Milgrom.

When asked what he will do with the prize money or replied: "I will probably just save it for my wife and children: saving while waiting for better times." 

, born in 1948, has been a professor since 1987: an expert in 'game theory', he specializes in auction theory and price strategies and is the creator of the 'No trade' theorem together with Nancy Stockey.

Together with Wilson, he created the auction protocol that the FCC, the American Federal Communications Commission, uses to determine which telephone company wins which frequencies.

Milgrom has formulated a more general theory on auctions that not only regulates common values ​​but also so-called private values, that is, which vary from buyer to buyer.

He analyzed bidding strategies in a number of well-known auction formats, showing that the format gives the seller higher revenue when the bidder knows more about the value attributed by other buyers.

The award was awarded by Sveriges Riksbank, the Swedish Central Bank, in memory of Alfred Nobel.

The Nobel Prize for Economics is in fact officially the Swedish Central Bank Prize for Economic Sciences in memory of Alfred Nobel and has been awarded since 1969, following the establishment by the Sveriges Riksbank - which in that year celebrated the 300 years since its foundation - a special endowment fund for the awarding of the prize.

This prize was not foreseen in Alfred Nobel's will, but is managed by the Nobel Foundation and delivered together with the other prizes.