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Monday, October 12, 2020

Nobel of economics 2020 to Paul Milgrom and Robert Wilson



This year the Nobel Prize in the field of economics has been given to Paul R. Milgrom and Robert B. Wilson. Milgrom and Wilson have been awarded this award for improving auction theory (auction theory) and inventing new methods of auction.

What is the auction principle?

Using auction theory, researchers try to understand the results of various rules for bidding and final prices. This analysis is difficult, because bidders conduct strategic behavior based on available information. They keep both sides in mind what they themselves know and what the other bidders know according to them.

Wilson developed the theory for the auction of a common value item. Accordingly, a value that is already uncertain but at the end remains the same for all. Wilson showed through his theory why rational bidders place bids below their best estimate of their normal value. They are concerned about the loss of being the winner. That is, they are worried about overpaying and the loss due to it.

Milgrom formulated a general principle of auction that not only allowed normal values, but also private values. This private value bid varies for each bidder. He analyzed bidding strategies in several well-known auction formats. Which showed that when people get more information about each other's estimated prices when bidding, a format gives the seller higher expected revenue.

This year's Nobel Prize Winner

Field                       Winner

Medicine - Harvey J. Alter, Michael Houghton and Charles M. Rice

Physics - Roger Penrose, Reinhard Gangel and Andrea Gage

Chemistry - Emmanuel Carpentier and Jennifer Dudna

Peace - World Food Program

Literature - Louis Gluck

Economics - Paul Milgrom and Robert Wilson
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