Nobel Economics Prize Awarded to 'Paul Milgrom and Robert Wilson'... "Invented New Auction Format" (Comprehensive)

Professor at Stanford University, USA... Research on Auction Theory
Enabling Frequency Auctions... Increasing Social Benefits

The Royal Swedish Academy of Sciences Nobel Committee announced on the 12th (local time) that Paul Milgrom and Robert Wilson, professors at Stanford University in the United States, have been selected as the recipients of the 2020 Nobel Prize in Economics. (Photo by Nobel Committee YouTube capture)

[Asia Economy Reporter Moon Jiwon] This year's Nobel Prize in Economics was awarded to Paul Milgrom (72) and Robert Wilson (83), who have been researching 'auction theory' together at Stanford University in the United States.

The Nobel Committee of the Royal Swedish Academy of Sciences announced on the 12th (local time) that Professors Paul Milgrom and Robert Wilson of Stanford University were selected as the 2020 Nobel Prize in Economics laureates.

The Nobel Committee explained the reason for their award, stating, "Auctions take place everywhere and affect our daily lives," and "Milgrom and Wilson improved auction theory and invented new auction formats, benefiting sellers, buyers, and taxpayers worldwide."

The two scholars clarified how auctions work and why bidders behave in certain ways and also devised new auction formats.

The auction formats they developed have been used to sell goods and services that are difficult to sell by traditional methods, such as radio frequencies, natural gas, electricity, and rights for aircraft to take off and land at airports during specific times.

The United States first introduced their auction theory in 1994 and conducted wireless frequency auctions targeting telecommunications operators, followed by other countries applying this theory.

By utilizing the new auction methods developed by the two scholars, broad social benefits can be derived rather than just maximizing profits.

Milgrom is a professor in the School of Humanities and Sciences at Stanford University, researching various fields of economics including auctions, incentive theory, industrial economics, economic history, and game theory. Leveraging his expertise, he advised on equity auctions during Google's initial public offering (IPO).

He developed a general theory that not only common values but also private values vary depending on the bidder.

Wilson is an emeritus professor at Stanford Graduate School of Business, specializing in competitive bidding such as auctions, price-setting plans, and wage negotiation models. He is recognized for contributing to the improvement of auction models in fields such as oil, telecommunications, and electricity.

He has published research revealing that rational bidders bid lower than the estimated common value due to concerns about the winner's curse.

The committee explained, "Milgrom and Wilson introduced new auction methods through theoretical approaches and contributed to maximizing benefits for buyers and sellers, taxpayers and users, and society as a whole."

The Nobel Prize was established by Swedish inventor Alfred Nobel, who invented dynamite, and has been awarded since 1901. Originally, there were five fields: medicine, physics, chemistry, literature, and peace, but the Swedish central bank separately established the Nobel Prize in Economics in 1968.

The Nobel Prize in Economics is treated on par with other Nobel Prizes, and the reviewing body is the Royal Swedish Academy of Sciences, the same as for the Chemistry and Physics Prizes.

The laureates share a prize of 10 million Swedish kronor (approximately 1.3 billion KRW).

This content was produced with the assistance of AI translation services.