WASHINGTON (dpa-AFX) - Two U.S. auction theorists have won the Nobel Prize in Economic Sciences.
Announcing the news on Monday, The Royal Swedish Academy of Sciences said it decided to award Stanford University game theorists Paul R. Milgrom and Robert B. Wilson 'for improvements to auction theory and inventions of new auction formats'.
Milgrom, 72, is currently Professor of Humanities and Sciences, Stanford University.
Wilson, 83, is Professor of Management, Emeritus, at Stanford University.
'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 benefited sellers, buyers and taxpayers around the world,' the Academy said in a statement.
Using auction theory, researchers try to understand the outcomes of different rules for bidding and final prices, the auction format. The analysis is difficult, because bidders behave strategically, based on the available information. They take into consideration both what they know themselves and what they believe other bidders to know.
Robert Wilson developed the theory for auctions of objects with a common value - a value which is uncertain beforehand but, in the end, is the same for everyone.
Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder.
Milgrom and Wilson invented new formats for auctioning off many interrelated objects simultaneously, on behalf of a seller motivated by broad societal benefit rather than maximal revenue. In 1994, the US authorities first used one of their auction formats to sell radio frequencies to telecom operators. Since then, many other countries have followed suit.
'This year's Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally,' says Peter Fredriksson, chair of the Prize Committee. Their discoveries are of great benefit to society, he added.
The Prize amount of 10 million Swedish kronor ($1.13 million) will be shared equally between the Laureates.
With this, announcements in all Nobel Prize categories have been completed.
Copyright RTT News/dpa-AFX