Nobel Prize in Economic Science awarded to Paul R Milgrom and Robert B Wilson. They were honored for “improvements to auction theory and inventions of new auction formats.” The Nobel committee stated that, “this year’s Economic Sciences Laureates, Paul R Milgrom and Robert B Wilson have improved auction theory and invented new auction format, benefitting sellers, buyers and taxpayers around the world.”
The work by Robert Wilson showed why rational bidders tend to place bids below their own best estimate of the common value: they are worried about the winner’s curse – that is, about paying too much and losing out. Meanwhile, Paul Milgrom formulated a general theory of auction that not only allows common values, but also private values that vary from bidder to bidder.
“This year’s Economic Science Laureates, Paul Milgrom and Robert Wilson, have not just clarified how auctions work and why bidders behave in a certain way, but used their theoretical discoveries to invent entirely new auction formats for the sale of goods and services,” said the committee.
The Royal Swedish Academy of Sciences noted that the discoveries by Mr. Milgrom, 72, and Mr. Wilson, 83, “have benefitted sellers, buyers and taxpayers around the world,” it said in a statement.
Nobel Prize in Economic Science
The award puts an end to a week of Nobel Prizes. The award is technically known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Since its inceptions in 1969, it has been awarded 52 times. This prestigious award comes with a gold medal and a 10-million krona ($1.1 million) cash prize.
Last year, the recipients of the award were two researchers from Massachusetts Institute of Technology – Indian American Abhijit Banerjee and his wife Esther Duflo and a third researcher from Harvard University for their groundbreaking research into efforts to reduce global poverty.