Paul Milgrom & Robert Wilson: Noble Prize Winner in Economics 2020
“improvements to auction theory and inventions of new auction formats.” Their work benefitting sellers, buyers, and taxpayers around the world.”
Paul Milgrom & Robert Wilson
Paul Milgrom and Robert Wilson
Paul R. Milgrom, born in 1948 in Detroit, USA.Ph.D. 1979 from Stanford University, Stanford, USA. Shirley and Leonard Ely Jr. Professor of Humanities and Sciences, Stanford University, USA.Robert B. Wilson, born in 1937 in Geneva, USA.D.B.A. 1963 from Harvard University, Cambridge, USA. Adams Distinguished Professor of Management, Emeritus, Stanford University, USA.
Now The word come to us is ‘Auction theory’.
Auction theory relates to the design of auctions and how this influences the bidding strategies of the parties taking part in the auction. Auctions take place in which different parties bid for the right to purchase goods or, in the construction industry, to win tender contracts for project work.
What is ‘Auction theory’?
The outcome of an auction depends on three factors —
1.the first is the auction’s rules, or format.
Are the bids open or closed?
How many times can participants bid in the auction?
What price does the winner pay — their own bid or the second-highest bid?
2.The second factor relates to the auctioned object.
Does it have a different value for each bidder, or do they value the object in the same way?
3.The third-factor concerns uncertainty. What information do different bidders have about the object’s value?
we all know the word ‘Auction’ only by selling antique or precious things. This theory is about regular business, it’s different perspectives.
1. it is possible to explain how these three factors govern the bidders’ strategic behavior and thus the auction’s outcome.
2.The theory can also show how to design an auction to create as much value as possible.
Both tasks are particularly difficult when multiple related objects are auctioned off at the same time.
Now let’s see what this year’s economist work.
This year’s Laureates in Economic Sciences have made auction theory more applicable in practice through the creation of new, bespoke auction formats.
“The new auction formats are a beautiful example of how basic research can subsequently generate inventions that benefit society,”
“This year’s Laureates, Paul Milgrom and Robert Wilson, have studied how auctions work. They have also used their insights to design new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies,”
-The Royal Swedish Academy of Sciences said in a press release.
“This year’s Laureates in Economic Sciences started out with a fundamental theory and later used their results in practical applications, which have spread globally. Their discoveries are of great benefit to society,”
- Peter Fredriksson, chair of the Prize Committee.
Most auction theory revolves around these four “basic” auction types. “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,”
Originally published at https://www.thelitthings.com.
