Two economists from Stanford won the Nobel Prize in Economics on Monday for their improvement on the theory of auctions- while inventing and upgrading the formats of auctions. Needless to say, auctions have become a part of the economy now- which points to the importance of its improvement. The Nobel Committee stated that Paul R. Milgrom and Robert B. Wilson have discovered something in the world of economics that would be benefitting buyers, sellers, and taxpayers around the world. They also noticed that this discovery has actually been used in several fields- from selling radio frequencies to fishing quotas.
Both of these economists have their bases at Stanford University, where their news was taken in quite a weird way. Milgrom stated that he had been informed of this by his Ph.D. advisor Bob Wilson, who lives down the road from him. As it goes, not many were surprised at the duo getting the Nobel Prize, for most thought that it was long due.
Goran Hansson, the secretary-general of the Royal Swedish Academy of Sciences, announced the awards on Monday- which rounded off a typical Nobel Prize week. The Nobel committee described the work of Wilson as a project that perfectly captured why rational bidders had a tendency to place buds that were below their own best estimate.
The reason? They were afraid of the winner’s curse- when one paid too much but lost out on it. As luck would have it- both these economists from Stanford University seemed to have not contracted the curse themselves- as they got their Nobel prize.