Nobel Prize For Economic Sciences 2020: Paul Milgrom, Robert Wilson Jointly Honoured For 'Improving Auction Theory'

Nobel Prize For Economic Sciences 2020: Paul R. Milgrom and Robert B. Wilson won this year's Nobel Prize For Economic Sciences for improvements to auction theory and inventions of new auction formats.

Nobel Prize In Economic Sciences 2020. (Image: The Nobel Prize/Twitter)

The Royal Swedish Academy of Sciences on Monday October 12, awarded the 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Paul R. Milgrom and Robert B. Wilson for "for improvements to auction theory and inventions of new auction formats." The prestigious award includes a gold medal and prize money of 10 million Swedish kronor, to be shared equally between the Laureates. The award-giving body in a tweet on Monday said Robert Wilson 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. For the other recipient, the organisation said that Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder.

Know About The Winners Of Nobel Prize In Economic Sciences 2020 Robert Wilson: Born 1937 in Geneva, Wilson is currently Jr. Professor of Humanities and Sciences at Stanford University, USA. As stated by the awarding giving organisation, Robert Wilson developed the theory for auctions of objects with a common value – a value which is uncertain beforehand but, in the end, is the same for everyone. Examples include the future value of radio frequencies or the volume of minerals in a particular area. Wilson 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.  Paul Milgrom: Paul Milgrom, born in 1948 in Detroit, is currently Distinguished Professor of Management, Emeritus, Stanford University in USA. He formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder. He analysed the bidding strategies in a number of well-known auction formats, demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding.