2 Americans share 2020 Nobel Prize in economics for improving auctions, inventing new formats

The Royal Swedish Academy of Sciences on Monday awarded the 2020 Nobel Prize in economics to two American researchers at Stanford, Paul R. Milgrom and Robert B. Wilson, for "improvements to auction theory and inventions of new auction formats."

"People have always sold things to the highest bidder, or bought them from whoever makes the cheapest offer," the academy said. Milgrom and Wilson studied how auctions work, formulated different theories, then "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 benefited sellers, buyers, and taxpayers around the world."

The U.S. government was one of the first to try out Milgrom and Wilson's theories, selling radio frequencies to telecoms in 1994. Their new formats allowed "auctioning off many interrelated objects simultaneously, on behalf of a seller motivated by broad societal benefit rather than maximal revenue," the Royal Swedish Academy wrote. This is the final Nobel prize of the year. The two economists will split the $1.1 million prize.

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