Nobel Prize Economics winner 2020
October 12, 2020 - American economists Paul R. Milgrom and Robert B. Wilson have been awarded the Nobel Prize for economic sciences “for improvements to auction theory and inventions of new auction formats”.
“Their discoveries have benefitted sellers, buyers and taxpayers around the world,” the Nobel Committee said, noting that the auction formats developed by the winners have been used to sell radio frequencies, fishing quotas and airport landing slots.
The committee said Wilson’s work showed “why rational bidders tend to place bids below their own best estimate of the common value,” that is, “the value which is uncertain beforehand but, in the end, is the same for everyone.”
“(Bidders) are worried about the winner’s curse — that is, about paying too much and losing out,” the committee said.
Milgrom developed a more general theory of auctions that takes into account was is known as the “private value” of what's being sold that can vary greatly from bidder to bidder.
The prestigious award comes with a 10-million krona ($1.1 million) cash prize and a gold medal.