Nobel Prize in Economics For CERGE-EI ESC Member Paul Milgrom

12 October, 2020

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020 was awarded jointly to Paul R. Milgrom and Robert B. Wilson "for improvements to auction theory and inventions of new auction formats." CERGE-EI Director Sergey Slobodyan and faculty member Ole Jann commented on the work of prof. Milgrom, who is a member of the Executive and Supervisory Committee. 

"CERGE-EI is proud to announce that Paul Milgrom, the Executive and Supervisory Committee member since 2015, won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020. He joins two other ESC members, Joseph Stiglitz and Christopher Sims, in the ranks of recipients of this most prestigious award for an economist," said CERGE-EI Director Sergey Slobodyan.

This year’s Laureates, Paul Milgrom and Robert Wilson, have studied how auctions work. They have also used their insights to design new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies. Their discoveries have benefitted sellers, buyers and taxpayers around the world.

CERGE-EI faculty member Ole Jann commented on the work of prof. Milgrom: "Paul Milgrom's work has allowed us to understand the inner workings of auctions and the strategic behavior of bidders, and he invented new auction formats that are used around the world today," said Ole. 

"Assets worth billions of dollars/crowns change hands in auctions every day -- when companies or governments issue debt, when licenses for natural resources or mobile phone spectrum are sold, or when governments engage in public procurement. Many other economic phenomena can be understood better with the tools of auction theory, such as company takeover battles or lobbying. The fact that auctions are so central and ubiquitous but work so well that we hardly think about them is in no small part a result of the work Milgrom has done since the late 1970s," he added. 

"He has many accomplishments, both in his theoretical work but also in giving practical policy advice to governments. Among his greatest successes are his contributions to the theory of auctions with private values, and his advice to the US Federal Communications Commission which led to the first auctions for mobile phone spectrum in the 1990s -- a practice that is now commonplace around the world," Ole concluded.

CERGE-EI Director Sergey Slobodyan mentioned another form of auctions related to Milgrom's contribution. "His work has influenced others who have designed auction formats for selling keywords in Internet searches; every person, typing a search request into Google search line, encounters outcomes of these auctions," said Sergey.

"This year's Prize in Economic Sciences is a reminder that Economics is a science affecting everyone. As in every science, good economic theory is the most practical thing there is," he concluded.

We were proud to welcome prof. Milgrom at CERGE-EI back in 2012. Here's a little reminder.