Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ US https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Nobel Prize in Economics goes to Americans Paul R. Milgrom and Robert B. Wilson for innovation at auction

Nobel Prize in Economics goes to Americans Paul R. Milgrom and Robert B. Wilson for innovation at auction

Stockholm – Two U.S. economists won the Nobel Prize on Monday for improving auction performance, a study that underpins today’s economy, from the way Google sells advertising to the way telecommunications companies acquire airtime from the government.

The findings of Paul R. Milgrom and Robert B. Wilson, both of Stanford University, “have benefited sellers, buyers and taxpayers around the world,” the Nobel Committee said.

Wilson was once Milgrom’s doctor. advisor, and the two are also neighbors. Reached over the phone at his home in California, Milgrom said he received the news of their victory “in a strange way.”


“I knocked on my door from Bob Wilson when he was still in the middle of the night,” he told the Associated Press.

Milgrom, 72, said students, friends and colleagues have long speculated that he and Wilson, 83, may be responsible for the award.

“It’s good to have their respect, but also their affection,” Milgrom said.

The two men tackled the complex problem of making tenders work effectively. The commission said Wilson’s work showed “why rational bidders tend to bid below their own best estimate of the total value” – which could mean the item costs less than it costs and may not cost the buyer. who wants it the most, none of them should happen if the auction is working properly.

The effects of their work can be seen around. “Online advertising is auctioned,” said David Warsch, who tracks economic research on his Economic Principals blog. “The fact that Google was able to adopt the method so quickly and seamlessly depends entirely on the theory developed by Milgrom and his competitors and their students.”

Work is more than money. Some governments, for example, are auctioning off pollution rights in hopes of reducing emissions; cleaner companies can resell unnecessary rights to dirtier ones, creating a financial incentive for companies to make their operations greener. “The goal is not always to maximize the seller’s income, but there can also be a public goal,” said Nobel Committee member Ingrid Werner.

One of the problems for auction sellers is the so-called curse of the winner. If buyers are vying to buy, say, fishing rights, they have to make offers without knowing what the price of the fish will be in the future. They begin to worry that they will only win by overpaying and can respond by reducing their bids.

The solution, as shown by Wilson and Milgrom’s research, is for the seller to provide as much information as possible before bidding begins, perhaps to provide an independent assessment of the item being sold.

They also tackled the “snake strategy in the grass,” Wilson said. This includes a company that keeps its interest in the item sold a secret for most of the auction and then makes the winning bid at the last minute.

“It’s like sniping an auction on eBay,” Wilson told the AP, adding that they had created rules that forced bidders to disclose their interest earlier.

Leader of the World Food Peace Prize Program


Their research has had a major impact on the telecommunications industry, where private companies are seeking government licenses to use public radio frequencies for everything from cell phone calls to online payments.

Prior to the 1990s, the US government essentially held “beauty contests” to distribute frequencies, allowing companies to argue for licenses. The approach encourages aggressive lobbying, but does not raise much money for the treasury.

In 1994, the US government turned to auctions. Milgrom and Wilson (with the help of Preston McAfee, now at Google) developed an auction format in which all licenses were sold at once. This format discourages speculators from buying frequencies in a particular geographical area and then reselling them to large telecommunications companies seeking to consolidate national or regional networks.

The auction raised $ 617 million – sales frequencies that were previously distributed for virtually nothing – and became a model for countries from Canada to India. The format is also used to auction electricity and natural gas.

Wilson said he thought his time to win the Nobel Prize for his work was over.

Speaking to reporters in Stockholm on the phone after learning of his victory, Wilson struggled to think of a recent auction in which he himself had participated. But then he added, “My wife tells me we bought ski boots on eBay.”

Wilson describes Milgrom, who is developing a more general theory of bidding, as “something of a genius behind all this auction work.”

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Americans are prominent among this year’s Nobel Prize winners. Leaving aside the Peace Prize that went to the UN World Food Program, seven of the 11 winners are Americans.

Goran Hanson, secretary general of the Royal Swedish Academy of Sciences, who announced the award, said it reflected US investment in post-World War II research. “And we will see how this trend can change,” he added.

Wilson said that given the coronavirus pandemic, he had no immediate plans for what to do with his share of the 10 million kroner ($ 1.1 million) cash prize that comes with the prize, along with a gold medal.

“I’ll probably just keep it for my wife, my children,” he said.

Last year’s award went to two researchers from the Massachusetts Institute of Technology and a third from Harvard University for their groundbreaking research in efforts to reduce global poverty.

Few economists could have predicted last fall that the globe would reach a virtual impasse within months as governments closed borders, imposed blockades and ordered other measures to halt the spread of COVID-19, causing a sharp drop in business activity. worldwide.

The prestigious award comes with a 10 million kroner ($ 1.1 million) cash prize and a gold medal.

On Monday, the Nobel Committee awarded award for physiology and medicine to detect the liver-destroying hepatitis C virus. Tuesday physics award honor breakthroughs in understanding the secrets of cosmic black holes and award for chemistry on Wednesday went to the scientists behind a powerful gene editing tool.

The literature award was awarded to American poet Louise Gluck on Thursday for her “candid and uncompromising” work. The World Food Program won Nobel Peace Prize on Friday for its efforts to fight global hunger.

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