Stockholm, Oct 12 (IANS) The 2020 Nobel Prize in Economics was on Monday awarded to American economists Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats”.
According to the Royal Swedish Academy of Science, Wilson has been awarded this year’s Nobel Prize in Economic Sciences as he “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 Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally. Their discoveries are of great benefit to the society,” said Peter Fredriksson, chair of the Prize Committee.
The Nobel laureates in Economic Sciences have produced research results that have deepened the understanding of how auction markets function in the presence of private information, said the Committee for the prize.
Their findings have allowed trained analysts to design new auctions and practitioners to choose more wisely among existing auction formats. Milgrom and Wilson have brought theory and practice tightly together, as few other economists have done.
“In sum, their research on auction theory and auction design has been instrumental in gradually replacing a process of intuitive trial and error with a more rigorous scientific approach,” it said.
Both Milgrom and Wilson are affiliated to the Stanford University.
In 2019, the award was shared by Indian-origin economist Abhijit Banerjee, Esther Duflo and Michael Kremer. They were awarded for their experimental approach to alleviating global poverty.