Paul Milgrom and Robert Wilson won the 2020 Nobel Prize in economics for their work in economics for research on auctions.
Paul R. Milgrom and Robert B. Wilson, both of Stanford University, won the 2020 Nobel prize in economics for their work in developing the theory of auctions.
“They have 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 statement on Monday.
Wilson, who was born in 1937 in Geneva, demonstrated why rational bidders tend to place bids below their own best estimate of the common value, because they’re worried about the so-called winner’s curse, which describes the phenomenon of paying more than something’s actually worth.
Milgrom, born in 1948 in Detroit, analysed bidding strategies in a number of well-known auction formats. He showed that a format will give the seller a higher expected revenue when bidders learn more about each other’s estimated values during bidding, the academy said.
Annual prizes for achievements in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite, who died in 1896. The prize in economic sciences was added by Sweden’s central bank in 1968.
Last year’s economics prize went to Abhijit Banerjee and Esther Duflo of the Massachusetts Institute of Technology and Michael Kremer of Harvard University “for their experimental approach to alleviating global poverty.”
Previous winners include Paul Krugman, Daniel Kahneman, Amartya Sen and Milton Friedman.
The Nobel Foundation announced last month it was increasing the amount awarded for individual prizes to 10 million kronor ($1.1 million), from 9 million kronor previously, to reflect a rise in the returns generated on its capital.
The economics prize concludes this year’s list of Nobel awards.
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