Auctions are everywhere and affect our everyday lives, said the Nobel committee in its statement, adding, “this year’s Economic Sciences Laureates, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefitting sellers, buyers and taxpayers around the world.”
The award caps a week of Nobel Prizes and is technically known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Since its establishment in 1969, it has been awarded 52 times and is now widely considered one of the Nobel prizes.
Explaining the achievements of the Nobel laureates, the committee noted that Wilson’s work 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, Milgrom formulated a more general theory of auctions 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.
Last year’s award went to two researchers from the 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.
The prestigious award comes with a 10-million krona ($1.1 million) cash prize and a gold medal.
On Monday, the Nobel Committee awarded the prize for physiology and medicine for discovering the liver-ravaging hepatitis C virus. Tuesday’s prize for physics honoured breakthroughs in understanding the mysteries of cosmic black holes, and the chemistry prize on Wednesday went to scientists behind a powerful gene-editing tool.
The literature prize was awarded to American poet Louise Gluck on Thursday for her “candid and uncompromising” work. The World Food Programme won the Nobel Peace Prize on Friday for its effort to combat hunger worldwide.
(With inputs from agencies)
Watch Paul R Milgrom and Robert B Wilson win 2020 Nobel Prize in Economics