Nobel Prize in Economics awarded to Paul Milgrom and Robert Wilson for their work on auction theory

The Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics to Paul R. Milgrom and Robert B. Wilson for designing “new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies”. Milgrom and Wilson, 72 and 83 years old, are two American economists, experts in the field of auctions.

The committee explained that “auctions are everywhere and affect our everyday lives: this year’s Economic Sciences Laureates have improved auction theory and invented new auction formats, benefitting sellers, buyers and taxpayers around the world”.

Wilson, with his studies, 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”.

Unlike others Nobel Prizes, the reward, whose amount is 10 million Swedish kronor (about 1.14 million U.S. dollars), has been awarded by Sveriges Riksbank (Sweden’s central bank) in memory of Alfred Nobel. The Nobel Prize in Economic Sciences is officially the “Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel” and is assigned since 1969, the year of the Bank’s 300th anniversary, after a donation from Sveriges Riksbank.

The prize is not established in Alfred Nobel’s will. This is why it is managed by the Nobel Foundation and is assigned with the other Nobel Prizes.

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