Stanford celebrates 100 years of GSB

 GSB at 100: A Century of Impact, by Michael McDowell  interviews leading faculty members including

"Susan Athey: The GSB has had so many impacts, but let me just pick one particular issue that’s close to my heart, which is that it’s been several times in its history, it’s really been on the frontier of important ideas. One of the big ideas in the group that I’m in was market design and the use of formal strategic thinking and game theory and information economics to understand real phenomena. And Bob Wilson, who’s one of the grandfathers of the group that I sit in, Economics, he worked with oil companies in 1960s and looked at their bidding data and then developed formal theories that helped understand what was going wrong in those markets and how to fix it. And then later, he advised one of my advisors, Paul Milgrom, and they shared the Nobel Prize for some of their work on market design.

"And so, there’s many different takes on that, but one of my takes was that there was the connection to the world and the fact that the problem they were solving was coming out of a real problem leading to cutting edge theory that then created a field that didn’t exist. More recently, we were on the cutting edge of using machine learning for decision problems and what’s called causal inference, formally, and now Stanford is the best place in the world to do this kind of research. To go from zero in 2012 to best in the world with multiple amazing young scholars doing cutting edge research in 12 years is really stunning. And the GSB really supported us in that endeavor.

"So I think the GSB has been a really fabulous place for helping us stay grounded and really connected to real problems, but also allowing us to hire the kind of talent and giving us the space to do the pure research that doesn’t just solve today’s practical problems, but that actually builds the foundation for many people to solve applied problems."

Big Ideas: Auctions with Nobel Laureates Paul Milgrom and Robert Wilson

Ran Abramitzky interviews Bob Wilson and Paul Milgrom:

Happy birthday to Bob Wilson

  Happy birthday Bob!

Honoring Milgrom and Wilson at the ASSA meetings in January (video)

 The video is at the link, there are four ten minute discussions, followed by brief responses by Paul and Bob. 

My discussion of Bob Wilson begins at around 27:20, and my final words to him were "Bob: you saw and demonstrated the future of game theory in economics, earlier and more clearly than anyone else.  We’re all lucky to know you."

AEA Nobel Laureate Address Honoring the 2020 Nobel Laureates Paul R. Milgrom (Stanford University) and Robert B. Wilson (Stanford University)
January 8, 2022 at 2:30 PM ET
View Recording

Presiding: Christina D. Romer, University of California-Berkeley

Susan Athey

, 

Stanford University

Topic: Honoring Paul R. Milgrom

Bengt Holmstrom

, 

Massachusetts Institute of Technology

Topic: Honoring Paul R. Milgrom

Alvin Roth

, 

Stanford University

Topic: Honoring Robert B. Wilson

Srihari Govindan

, 

University of Rochester

Topic: Honoring Robert B. Wilson

Paul Milgrom and Robert Wilson. From theory to practice in auctions (in French)

 Here's a tribute to Milgrom and Wilson in French (but Google translate does a pretty good job):

Paul Milgrom et Robert Wilson. De la théorie à la pratique des enchères, par Florence Naegelen, Dans Revue d'économie politique 2021/6 (Vol. 131), pages 825 à 847

G translate: Paul Milgrom and Robert Wilson. From theory to practice in auctions

Here's one snippet:

"R. Wilson ([1967], [1969] and [1977]) provided the first analysis of Bayesian equilibrium strategies in the case of a common and uncertain value. This work was extended by P. Milgrom [1981a] and by many other authors subsequently. [6] Introducing the hypothesis of conditional independence according to which the signals received are positively correlated, Wilson [1969] thus showed that, in this context, the winner was the one who overestimated the true value of the object the most. He also highlighted how agents should determine their offers by incorporating into their strategies that the winner is the one with the highest signal."

The Economist celebrates Milgrom and Wilson, and economic engineering

 The Economist has weighed in on the 2021 Nobel Prize in Economics:

The Nobel prize in economics rewards advances in auction theory. For the third time since 2007, it goes to designers of market mechanisms, Oct 17th 2020

"In 1991 Alvin Roth, who in 2012 would share the Nobel prize for economics, was asked how the discipline might change over the century to come. “In the long term”, he wrote, “the real test of our success will be not merely how well we understand the general principles which govern economic interactions, but how well we can bring this knowledge to bear on practical questions of microeconomic engineering.” Sweden’s Royal Academy of Science seems to agree. On October 12th it gave this year’s Nobel prize to Paul Milgrom and Robert Wilson, both of Stanford University, for their work on auction theory and design. Their work epitomises economics as engineering.

...

"The pursuit of economics as a form of engineering means that Messrs Milgrom and Wilson are more enmeshed in the real world than the typical academic. Both have consulted for regulators and firms. Mr Milgrom advised Time Warner and Comcast on their participation in radio-spectrum auctions in 2006; his efforts helped save his clients more than $1bn. In 2009 he co-founded a firm, Auctionomics, that provides consulting services to those looking to operate and to bid in auctions (many of the sort designed by the prizewinners).

"It is a different sort of work from that which many aspiring scholars imagine themselves to be pursuing. But the rewards the laureates have reaped in academia and beyond certainly advertise the power wielded by economic engineers."

Bob Wilson's autobiography is now available on the Nobel Prize website

 Here it is: https://www.nobelprize.org/prizes/economic-sciences/2020/wilson/biographical/

"Robert B. Wilson, Biographical

"1.Overview at age 83

"After rocky early years, I had a happy youth in a small town, and then stumbled through eight years at Harvard, emerging with little sense of what to do next, until I moved to Stanford where my research thrived. A minor project on adverse selection in auctions led me to join in the nascent reconstruction of economic theory using game-theoretic models, and then later, foundational topics in game theory, all focused on the role of agents’ information and their effect on incentives. I’ve enjoyed working with PhD students and been fortunate to have superb co-authors with better skills."

Milgrom on Auctions, Theorems, and the practice of Market Design, in the AER

 The latest issue of the AER publishes a version of Paul Milgrom's Nobel lecture:

Auction Research Evolving: Theorems and Market Designs  By Paul Milgrom

American Economic Review 2021, 111(5): 1383–1405   https://doi.org/10.1257/aer.111.5.1383

Here are a few of the introductory paragraphs:

"Game-theoretic modeling of auctions began in the 1960s with a pair of seminal papers by William Vickrey (1961, 1962) and the brilliant but unpublished doctoral dissertation of Armando Ortega-Reichert (1968). Robert Wilson (1977, 1979) became the next important contributor to auction theory research and, as Wilson’s student, I was inspired to make auctions and bidding the subject of my doctoral dissertation.

...

"Most of my work published in academic journals is theoretical, proving theorems about the properties of abstract models, but developing and participating in real-world mechanisms requires more than that. Two important lessons that I learned from working on high-stakes auctions are that they operate in an almost infinite variety of contexts, and that this variety is the reason for the paradoxical importance of including unrealistic assumptions in models built to understand and illuminate reality. No single set of assumptions is adequate to describe all the various settings in which auctions are used, and too much specificity in models can blind the analyst to important general insights.

...

"Why do economists rely on such unrealistic assumptions? It is because a well-chosen simplification can remove the dust and smoke that obscures our view of the workings of economic forces. Although we celebrate the resulting theorems for the insights they deliver, we can apply them successfully only by being vigilant, working hard to understand not just the insights that simplified analyses provide but also how the designs and rule choices they inspire must be adapted to withstand the dust and smoke and also the much larger disturbances of the particular worlds in which the mechanisms will operate."

And here are the concluding paragraphs:

"Auction theory has changed substantially since I made my first studies in what were still its early days. Although the “unrealistic” models of those times have proved their worth in guiding practical auction designs, some of that guidance was off point. In my own work, this showed up in the traditional analysis of the exposure problem. Despite the theoretical worst-case conclusion that exposure problems are intractable, we found that they could sometimes be quite manageable in practice.

"For the future, simulations and computational methods are likely to be increasingly important. Yet, it still takes theory to understand problems and the scope of proposed solutions. The time has come for old methods and new to work hand in hand."

Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson by Teytelboym, Li, Kominars, Akbarpour and Dworczak

 Here's a celebratory account of the Nobel winning work of Milgrom and Wilson. The authors have used the new AEA symbol for random ordering of authors, which I can't reproduce here (it's an r in a circle..)

Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson

by (in random order) Alexander Teytelboym  Shengwu Li  Scott Duke Kominers Mohammad Akbarpour Piotr Dworczak,  March 13, 2021

Abstract: The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Paul R. Milgrom and Robert B. Wilson for “improvements to auction theory and inventions of new auction formats.” In this survey article, we review the contributions of the laureates, emphasizing the subtle interplay between deep theoretical questions and practical design challenges that resulted in one of the most successful fields of economics.

Bob Wilson's Nobel lecture, in Econometrica

Here is Bob Wilson, in a very low key account of (what I would have described as) how he saw the future, changed economics, mobilized a generation of scholars, and won the Nobel.

Strategic Analysis of Auctions  by Robert B. Wilson, ECONOMETRICA: MAR 2021, VOLUME 89, ISSUE 2p. 555-561, https://doi.org/10.3982/ECTA19347

Abstract: The diploma for the Sveriges Riksbank Prize in Economics Sciences in Memory of Alfred Nobel that I shared in 2020 with Paul Milgrom cites “improvements in auction theory and inventions of new auction formats”.1 As requested by the Royal Swedish Academy of Sciences, this lecture describes the origin of my work on auctions. It complements the Nobel Lecture by Paul Milgrom (2021) that describes later developments in theory and practice.

Here's footnote 4:

"As an MBA student in 1959 I received a failing grade on a written analysis of a case involving competitive bidding because I invoked a mathematical analysis rather than the mandatory ‘administrative point of view’ "

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Earlier post:

Monday, October 12, 2020

Finally! Paul Milgrom and Bob Wilson win the 2020 Nobel Prize in Economics

Some more Nobel links for Wilson and Milgrom

 This was a Nobel year unlike any in recent memory, since the Covid pandemic prevented the festivities from being held in Stockholm as they usually are.  The Nobel lectures by Milgrom and Wilson were recorded at Stanford, and they received their medals from the Swedish consul in a private ceremony.

Here's the text of the Award Ceremony Speech by Tommy Andersson

Here's Bob Wilson's Nobel lecture:

Here's Paul Milgrom's Nobel lecture: 

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Paul Milgrom posted some reflections on his website:

2020 Nobel Prize Firsts and Lectures

1. "It was the first to be awarded outdoors and the first outside of Stockholm.
2. It was the first economics prize awarded to a student (Paul) with his disseration adviser (Bob).
3. It was the first awarded jointly to two people living across the street from one another.
4. Paul became the first to give TWO Nobel prize lectures, having already lectured on behalf of Vickrey in 1996.
5. The backyard ceremony was held behind a residence that had housed two economics laureates (Paul Milgrom & Joe Stiglitz), plus 3-time SuperBowl winning coach Bill Walsh!

"Also unusual is that, by focusing on Paul's auction contributions, the Nobel Committee had left unmentioned ten of Paul's twelve most highly cited publications."

*********

Here's an essay by Jacob Goeree:

How market design is transforming the role of economists into engineers

"there are many cases where the “invisible hand” does not work. Prof. Wilson’s analysis of the winner’s curse in common-value auctions is a prominent example. “Sometimes the invisible hand needs a bit of help, and that’s where market design comes in – for instance, making sure bidders can update their value estimates during the bidding process itself” 

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Here (live streamed today on Dec. 16) is an event originating in Vienna, including a video interview in which I talk to Ben Greiner. (It starts at 6pm CET, i.e. 9am PST):

The Nobel Prize in layperson’s terms

"This event is being organized by the WU Department of Economics

"Nobel Prizes are awarded every year in December, on the anniversary of Alfred Nobel’s death. Nobel laureates are celebrated in the media, but hardly anyone knows anything about the research that goes on behind the scenes. We plan to change that. In cooperation with experts, we will be introducing the work of the winners of this year’s Nobel Prize in Economic Sciences in terms that even laypeople can understand. We will analyze the innovative power of the work and discuss its significance and potential applications in practice.

Welcoming words: Tatjana Oppitz, Vice-​Rector for Infrastructure and Digitalization

Discussion: Maarten Janssen, Professor of Economics, University of Vienna

Maarten Janssen is Professor of Microeconomics at the University of Vienna. Among many others, his research interests are in the fields of game theory, industrial organization and competition policy, and in particular auctions. He is particularly interested in the implications of information asymmetries in markets and market design.

Stefan Felder, Rundfunk und Telekom Regulierungs-​GmbH: RTR

Stefan Felder studied at Technical University and University of Economics and Business in Vienna. He worked in the telecommunications industry and at the University of Vienna. As of 1998, he has been a member of the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR). He is an expert on spectrum auctions, competition analysis, and mobile communications. He is Head of Spectrum and Mobile Market at RTR.

Moderation: Maria Marchenko, WU

Maria Marchenko is an Assistant Professor at the WU Department of Economics. Her research lies in the fields of applied and theoretical econometrics using state-​of the art techniques and theoretical concepts with applications to networks and labor market.

Video interview: Alvin E. Roth, Winner of the Nobel Prize 2012; Professor of Economics, Stanford University

Alvin E. Roth is Professor of Economics at Stanford University. In 2012, he won the Nobel Prize in Economic jointly with Lloyd Shapley “for the theory of stable allocations and the practice of market design.’’

Update: here's the video: https://www.youtube.com/watch?v=oE2e6HynPvg&feature=youtu.be

 

Bob Wilson and Paul Milgrom, interviewed about their work

 Stanford News has the story:

The bid picture: Stanford economists explain the ideas behind their 2020 Nobel Memorial Prize in Economic Sciences

"If designed correctly, auctions can distribute resources fairly, according to Stanford economists Robert Wilson and Paul Milgrom. The pair were awarded the 2020 Nobel Memorial Prize in Economic Sciences for their improvements to auction theory and inventions of new auction formats."

Here's the video:

Interviews with Fuhito Kojima, Bob Wilson, and Al Roth in the Japanese economic magazine Diamond Weekly

 Here are three interviews conducted by the journalist Kohei Takeda for the Japanese economic magazine  DIAMOND WEEKLY, on their website DIAMOND ONLINE.   

Here are the headlines and beginnings via Google Translate.

The essence of the Nobel Prize in Economics "Game Theory", explained by a former colleague of the award winner--Interview with Fuhito Kojima, Professor of the University of Tokyo, Director of Market Design Center, University of Tokyo  by Kohei Takeda : Reporter

The interview begins with these opening words from Fuhito:

"Eight years ago, when Al (Professor at Alvin Roth Stanford University), who I had been taught, received the award, we held a grand celebration and press conference. I thought I couldn't do that this year due to the spread of the new coronavirus infection, but in the evening of the award day (October 12), planned by him and his wife Emily, in the garden of Al's house. A small celebration was held while keeping a certain distance from each other.

"At universities in the United States, teachers and students tend to live very close to the campus, so fellow researchers have more relationships with their neighbors. I still lived near the university, so I received an invitation email from Emily on the day and participated in the celebration. ...

"To me, Paul was a colleague at the university, but he is also like a mentor. After I got a job at Stanford University about 10 years ago, my research field was the same "market design" in the Faculty of Economics (Editor's note: one of the research fields of game theory) , and sometimes I wrote a co-authored paper. , I was able to build a good relationship.

"He is a major researcher I have known since I was a student... Bob taught both Al and Paul, so academically I'm also Bob's "grandson."

************

2020 Nobel Prize Winner "Auction Theory for Business" Special Lecture--Interview with Professor Emeritus of Robert Wilson Stanford University by Kohei Takeda : Reporter

The first thing Bob was asked to explain was his work on the winner's curse:

"I started working in this area in the 1960s. The background to this was the issue of oil drilling rights among US oil companies at that time. They had very incomplete information about what their oil reserves were. From the size of the oil field to whether or not it was filled with hydrocarbons, there were many things we didn't know. Oil companies were under pressure to estimate their reserves in such an unknown environment.

"When auctioning under these circumstances, each participating player tends to overestimate in order to win the bid. In this case, each estimate is a function to increase the likelihood of bidding, but oil companies face the challenge of significantly lower rates of return after investing in oil rigs. Was there.

"Eventually, this is (in a situation where each player does not have the same information, the information is asymmetrical, and the player eventually chooses the less valuable one in an attempt to maximize his or her profits). (Adverse selection) ”was recognized as a problem. In other words, there was a tendency to win bids only when overestimating.

"What I have built is a theory for bidding various things in the best possible way, taking into account the situation of such adverse selection. This achievement has attracted a great deal of attention and is one of my early achievements in research. The negative effect of overestimating what is being bid on and winning the auction has been called "Winner's Curse". However, the best bidding strategy takes its existence into account, so you won't suffer from the curse of the winner."

***********

Nobel laureate in economics "Matching theory that can be used in business" --Interview with Professor Alvin Roth Stanford University by Kohei Takeda : Reporter

The Economist reflects on market designers as economic engineers, in celebration of the Milgrom-Wilson Nobel

 Here is The Economist on Milgrom and Wilson:

The Nobel prize in economics rewards advances in auction theory--For the third time since 2007, it goes to designers of market mechanisms

HT: Mary Wilson

****************

Related recent posts:

Monday, October 12, 2020

Finally! Paul Milgrom and Bob Wilson win the 2020 Nobel Prize in Economics

Wednesday, October 14, 2020

Some links following the Nobel Prize to Milgrom and Wilson

Some links following the Nobel Prize to Milgrom and Wilson

 In my limited experience (but not just limited to my own experience) Nobel prizewinners are often asked about how they were notified of the fact that they won the prize, and by whom. Paul Milgrom and Bob Wilson certainly have one of the best stories to answer that question, and millions of people have already viewed the video from the Milgroms' Nest doorbell camera, as Bob tried to arouse Paul and give him the news.

Here's how USA Today covered that story:

Doorbell camera captures moment Nobel Prize winner is told by fellow recipient he's won

Paul Milgrom discovered via a Nest camera that he'd won the Nobel Prize in Economic Sciences.<>

The Nest doorbell broadcast also to Paul's wife Eva, who was visiting family in Stockholm, and who was alerted at the same time he was. Here's the view from the Swedish press (including a video of the video playing on her laptop...):

Här väcks pristagaren av sin kollega: ”Du har vunnit Nobelpriset” , 

(Google translate: Here the laureate is awakened by his colleague: "You have won the Nobel Prize")

That before-dawn encounter was recounted in this early interview:

Telephone interview with Robert B. Wilson following the announcement of the 2020 Nobel Prize in Economic Sciences. The interviewer is Adam Smith, Chief Scientific Officer of Nobel Media.

"AS: We just spoke with Paul Milgrom and he said that he heard the news by you walking across the street and ringing his doorbell.

RW: Well that’s right because he had turned his phone off for the … to get a good night’s sleep, and so somebody had to wake him, and he lives across the street so I just walked over and knocked on the door. I roused him.

AS: I think … I think this must be a first in the history of the Nobel Prize.

RW: Yes, how many times does … first to have a knock on the door, which sounds like something from the 19th century, and secondly that in fact the two of us live only, what, 40 m apart."

*****************

It turns out that Bob Wilson went to Lincoln High School in Nebraska (and that you can never escape your high school):

Lincoln High alum wins Nobel Prize in economics

MARGARET REIST, Lincoln Journal Star Oct 13, 2020 

"The Lincoln High School wall of distinguished alumni — the one with photos lining the school's main hallway — will need to make room for another photo.

"Robert Wilson, who graduated from Lincoln High in 1955, left for Harvard on a prestigious scholarship and ultimately landed at Stanford, won the Nobel Prize in economics Monday."

***********

Stanford published this picture: Stanford economists Paul Milgrom and Robert Wilson win the Nobel in economic sciences

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The day of the prize, the NY Times story by Jeanna Smialek got this fairly coherent quote from me before dawn:

“They haven’t just profoundly changed the way we understand auctions — they have changed how things are auctioned,” said Alvin E. Roth, a Nobel laureate himself who was one of Mr. Wilson’s doctoral students. 

***********

Joshua Gans, one of Paul's students, republished the remarks he had made on the occasion of Paul's 65th birthday (long ago...)

"There are so many things one could say about Paul but it turned out that I said what I wanted to say back in 2013 at a conference in his honor to celebrate his 65th Birthday."

*************

Bob's longtime colleague (and my one time housemate when we were grad students) David Kreps has a lovely essay, which includes this quote from Hugo Sonnenschein: 

"Great economists write great papers. But the greatest economists are those who found new schools of thought." 

David Kreps Lauds 2020 Nobel Laureate Robert Wilson

He writes that Bob's 

" impact on the discipline of economics, in my opinion, puts him in the company of giants such as Ken Arrow and Paul Samuelson: Bob is, as much as anyone, the founder of the “School of Economic Theory as Engineering.” Both in his own work, but even more through his influence on his students and colleagues, Bob has brought economic theory to the real world, both as a mechanism for understanding “how things work” and then in the design of better institutions. The Nobel Prize announced today is for his and Paul’s work on the design of complex auctions, such as the spectrum auctions, which is a prime example of economic theory as engineering. But, in addition:

• Bob himself has taken the theory of nonlinear pricing to practical applications in electricity markets.
• His student, Nobel Laureate Al Roth, brought matching-markets theory to the design of assignment algorithms, assigning MDs to internships, and to kidney exchange “markets.”
• His student, Nobel Laureate Bengt Holmstrom, brought incentive theory to practical considerations in the design of pay-for-performance systems (some in collaboration with Milgrom) and, more recently, to issues in financial institutions.
• His student and co-Nobel Laureate Paul Milgrom, besides his work on auction design, and in collaboration with our colleague John Roberts, brought economic theory to bear on the design and management of complex organizations (which, for my money, is even more important than his pathbreaking work on auctions; Paul could have been given the Nobel for any of several different topics, and his work on “the modern corporation” happens to be my personal favorite).
• And it continues: A third generation — students of Paul, Bengt, and Al, as well as others who have embraced this style of work and so became “adopted” members of Bob’s tribe — are building an intellectual edifice that mixes superb theory with real-world insight and applicability."

***************

Did you know that Paul has a company?  Here's the tribute on the Auctionomics website: 

Could the work of the latest Nobel laureate in economics be the key to America winning the 5G race with China?

***************

And amidst all the toasts, I had occasion to recall that the first footnote of my 2002 paper "The Economist as Engineer..." said 

"This paper is dedicated to Bob Wilson, the Dean of Design."

***********

Earlier post: 

Monday, October 12, 2020

Finally! Paul Milgrom and Bob Wilson win the 2020 Nobel Prize in Economics

Finally! Paul Milgrom and Bob Wilson win the 2020 Nobel Prize in Economics

 Could this be the best Nobel pairing ever?  (It's certainly a great one, and one of the best things to come out of 2020 so far...) Here's the announcement:

"The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats" https://www.nobelprize.org/

I've known Paul at least since 1978, when he attended a course I taught while on leave at Stanford, on Axiomatic Models of Bargaining. Bob advised both of our dissertations, although not at the same time.  

Bob is a legendary advisor of grad students.  Paul is now the third of Bob's  students to win a Nobel.  So Bob is well established as the patriarch of a Nobel dynasty.

Bob Wilson's Nobel dynasty (to date): Wilson (with Milgrom) 2020, and Bob's students Roth (with Shapley) 2012, Holmstrom (with Hart) 2016, and Milgrom (with Wilson) 2020

It looks like we should check back in 2024...

Here's another picture, from another celebration:

Bob Wilson being celebrated for the 2017 CME MSRI prize, by his students Al Roth, Paul Milgrom, and Bengt Holmstrom.

I've often blogged about  both Milgrom and Wilson, separately and together.

Here's a paragraph I wrote about Bob's work in our (only) joint paper, in which we interviewed each other:

 How Market Design Emerged from Game Theory: A Mutual Interview

Alvin E. Roth and Robert B. Wilson
Journal of Economic Perspectives—Volume 33, Number 3—Summer 2019—Pages 118–143

"Wilson (1977) introduced the model of common-value auctions (sometimes called the “mineral rights model”). The model and its equilibrium initiated a large body of theoretical, experimental, and applied work. One important insight from this model is that winning an auction contains “bad” news, since it implies in equilibrium that the winner’s estimate is the highest. In equilibrium, rational bidders fully account for this, but the paper raises the empirical question of the extent to which actual  bidders are able to fully discount for the fact that, if they win the auction, they likely overestimated the value of winning. Thus, Wilson’s work initiated a new research program on the winner’s curse, involving systematic overbidding compared to equilibrium, sometimes involving losses to the winning bidder. The private-value model of Vickrey (1961) and the common-value model of Wilson (1977) together form the basis of much of modern auction theory and practice, since most auctions have elements of both private and common value." 

Right after that, Bob and I talked about important influences on our work. Bob included this:

"I was deeply affected in the early 1990s by working with Paul Milgrom on design of the FCC spectrum auctions. I marveled at his insights and creativity in constructing rules for a “simultaneous ascending auction” that would have good prospects of yielding an approximately efficient outcome in an environment afflicted with strong complementarities, dispersed private information about market fundamentals, and substantial market power."  

To which I replied:

" I was also much influenced by Paul when we developed and co-taught what may have been the first courses in market design, in 2000 and again in 2001 when he was on leave at Harvard and MIT." 

*********

Here's an old snapshot:

Bob Wilson and Paul Milgrom in 2006

There's a rabbinical literature about the relationships between students and teachers. It often comes to mind when I think about how lucky I have been to have the students I've had. But today I'm reminded of my luck in having Bob Wilson as my teacher and friend, and Paul as my friend and colleague.

"Joshua ben Perahiah used to say: provide yourself a teacher and acquire yourself a friend. Judge everyone favorably." (Pirkei Avot, chapt 1 verse 6)

Here's how I recalled Bob as a teacher, in an autobiographical essay of a kind that they will each now be asked to write:

"Bob Wilson agreed to be my advisor and rescued me from having what looked to be a very short academic career after I failed one of my Ph.D. qualifying exams. He was on sabbatical that year, but met with me regularly once a week for an hour. In memory, our meetings followed a kind of script: I would spend a while explaining to him why I hadn’t made progress that week, and then he would spend a while telling me not to be discouraged. Then I would describe some roadblock to further progress, and he would, as we finished our meeting, recommend a paper for me to read. Because his recommendations had always been very much on target, I would go straight from his office to the library and start to read the paper. As I did, I would think, this time Bob made a mistake, this paper has nothing to do with my problem. But then, somewhere in the middle of the paper would be a lemma or remark that helped me get around that roadblock …"

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And here's a final picture from Stockholm in 2012, of me and Emilie and Paul and Eva, with Parag Pathak (one of Bob's academic grandchildren) in the  background.

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Read the press release

"The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2020 to

Paul R. Milgrom
Stanford University, USA

Robert B. Wilson
Stanford University, USA

“for improvements to auction theory and inventions of new auction formats”

...

“This year’s Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally. Their discoveries are of great benefit to society,” says Peter Fredriksson, chair of the Prize Committee."
Learn more in the popular information

"Every day, auctions distribute astronomical values between buyers and sellers. This year’s Laureates, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefitting sellers, buyers and taxpayers around the world."
Read the scientific background

How Market Design Emerged from Game Theory, by Roth and Wilson in the JEP

This paper was quite fun to collaborate on, with my dissertation advisor Bob Wilson...

How Market Design Emerged from Game Theory: A Mutual Interview
Alvin E. Roth and Robert B. Wilson
Journal of Economic Perspectives—Volume 33, Number 3—Summer 2019—Pages 118–143

Abstract
"We interview each other about how game theory and mechanism design evolved into practical market design. When we learned game theory, games were modeled either in terms of the strategies available to the players ("noncooperative games") or the outcomes attainable by coalitions ("cooperative games"), and these were viewed as models for different kinds of games. The model itself was viewed as a mathematical object that could be examined in its entirety. Market design, however, has come to view these models as complementary approaches for examining different ways marketplaces operate within their economic environment. Because that environment can be complex, there will be unobservable aspects of the game. Mathematical models themselves play a less heroic, stand-alone role in market design than in the theoretical mechanism design literature. Other kinds of investigation, communication, and persuasion are important in crafting a workable design and helping it to be adopted, implemented, maintained, and adapted."

**********
It turns out that some people read footnotes .  I got the following welcome email from Charlie Nathanson at Northwestern, expanding on one of mine (in which I reflected on writing a paper with Bob):

"I was delighted to see your reference to the Talmud in your JEP article that came out today (footnote 22). There is a verse from Pirkei Avot about the student/teacher relationship that I did not see in your footnote or in your linked blog post. In case you haven't come across it, I wanted to share it with you. It's chapter 4, verse 12 (https://www.sefaria.org/Pirkei_Avot.4.12):
רַבִּי אֶלְעָזָר בֶּן שַׁמּוּעַ אוֹמֵר, יְהִי כְבוֹד תַּלְמִידְךָ חָבִיב עָלֶיךָ כְּשֶׁלְּךָ, וּכְבוֹד חֲבֵרְךָ כְּמוֹרָא רַבְּךָ, וּמוֹרָא רַבְּךָ כְּמוֹרָא שָׁמָיִם:
Rabbi Elazar ben Shammua said: let the honor of your student be as dear to you as your own, and the honor of your colleague as the reverence for your teacher, and the reverence for your teacher as the reverence of heaven. 

Best wishes,
Charlie"

*********
And here's the footnote that prompted that email:

22 A brief account of our subsequent teacher–student interactions, along with some other remembrances related  to  the  present  essay,  is  included  in  my  intellectual  autobiography  at  the  Nobel  Prize  website:  https://www.nobelprize.org/prizes/economics/2012/roth/auto-biography/.   The   rabbinic   literature   does  not  overlook  teacher–student  relations.  In  the  Talmud,  for  example,  one  is  enjoined:  “Provide  for yourself a teacher and get yourself a friend ...” See my related blog post for more on this: https://marketdesigner.blogspot.com/2013/06/notes-on-teachers-and-students-from.html. The martial arts also value teacher–student relations, and I benefited from that too, as I describe at https://marketdesigner.blogspot.com/2013/06/honorary-7th-dan-black-belt-in-jka.html. 

The history of economic engineering, and other sessions at the ASSA today that I'll attend or wish I could

At the ASSA meetings this morning, I'll be discussing a session called

Economics and Engineering: Institutions, Practices and Cultures

Paper Session

 Friday, Jan. 4, 2019   8:00 AM - 10:00 AM

 Hilton Atlanta, 405

Hosted By: HISTORY OF ECONOMICS SOCIETY

·       Chair: Pedro Garcia Duarte, University of São Paulo

 

Engineering, Management Science, and American Economics, 1900 – 1940

Thomas Stapleford

,

University of Notre Dame

•  View Abstract

Engineering and Economics at Stanford, 1950-1990

Beatrice Cherrier

,

University of Cergy-Pontoise and CNRS

Aurélien Saïdi

,

Paris Nanterre University and ESCP Europe

•  View Abstract

German Fears in Economic Engineering: An Affective Criticism

Till Duppe

,

University of Québec-Montréal

•  View Abstract

Discussant(s)

Alvin Roth

*****************

I can't yet be sure what I'll say, but in my discussion of engineering and economics at Stanford I'll surely show a photo or two of Bob Wilson, maybe this old one:

Bob Wilson and Al Roth, Stanford IMSSS, 197x

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Later in the day (after some job-market interviewing) I plan to attend the

AEA/AFA Joint Luncheon

 Friday, Jan. 4, 2019   12:30 PM - 2:15 PM

 Atlanta Marriott Marquis, Imperial Ballroom

Hosted By: American Economic Association & American Finance Association

• Chair: Ben Bernanke, Brookings Institution

• Speaker: Susan Athey, Stanford University: The Impact of Machine Learning on Econometrics and Economics
• ************

Since I haven't figured out how to be in two places at once, I'll miss

Putting the "Ec" in Tech: Economics at Tech Firms

Paper Session

 Friday, Jan. 4, 2019   12:30 PM - 2:15 PM

 Atlanta Marriott Marquis, Marquis Ballroom A

Hosted By: NATIONAL ASSOCIATION FOR BUSINESS ECONOMICS

• Chair: Carolyn Evans, Intel Corp.

How Artificial Intelligence and Machine Learning Can Impact Market Design

Paul Milgrom

, 

Stanford University

Steven Tadelis

,

University of California-Berkeley

•  View Abstract
 
•  Download Preview (PDF, 865.75 KB)

Economics at Uber

Jonathan Hall

,

Uber

•  View Abstract

Digital Disintermediation and Efficiency in the Market for Ideas

Christian Peukert

,

Catholic University of Portugal

Imke Reimers

,

Northeastern University

•  View Abstract
 
•  Download Preview (PDF, 895.77 KB)

A Machine Learned, Real Time Measure of the Rate of Inflation

Patrick Bajari

,

University of Washington

Victor Chernozhukov

,

Massachusetts Institute of Technology

Ramon Huerta

,

University of California-San Diego

Ashish Mishra

,

Amazon

Bernhard Schoelkopf

,

Max Planck Institute

•  View Abstract

****************

• Later, if the creeks don't rise, I hope to attend

• Market Design for Online Platforms

  
  

   Friday, Jan. 4, 2019   2:30 PM - 4:30 PM

   Hilton Atlanta, 223
  Hosted By: ECONOMIC SCIENCE ASSOCIATION
  ·       Chair: Yan Chen, University of Michigan

  Toward an Understanding of the Economics of Apologies: Evidence from a Large-scale Natural Field Experiment

  Basil Halperin
  , 
  Uber Technologies Inc
  Benjamin Ho
  , 
  Vassar College
  John A. List
  ,
  University of Chicago, NBER, Uber Technologies Inc.
  Ian Muir
  , 
  Uber Technologies Inc
  ·        View Abstract

  The Design of Feedback Revision Rules - An Experimental Study

  Gary Bolton
  , 
  University of Texas-Dallas
  Kevin Breuer
  , 
  University of Cologne
  Ben Greiner
  , 
  Vienna University of Economics and Business
  Axel Ockenfels
  , 
  University of Cologne
  ·        View Abstract

  Team Competition and Driver Productivity in Ride-sharing: A Natural Field Experiment at Didi

  Wei Ai
  , 
  University of Michigan
  Yan Chen
  , 
  University of Michigan
  Qiaozhu Mei
  , 
  University of Michigan
  Jieping Ye
  , 
  University of Michigan and Didi Chuxing Inc.
  Lingyo Zhang
  , 
  Didi Chuxing Inc.
  ·        View Abstract

  Discussant(s)

  Laura Gee, 
  Tufts University
  Chiara Farronato, 
  Harvard University
  Stephanie Wang, 
  University of Pittsburgh
  Chenyu Yang, 
  University of Rochester
  ***********
• and at 4:45
• Richard T. Ely Lecture Presiding: Ben Bernanke Speaker: David Autor, Massachusetts Institute of Technology Topic: Work of the Past, Work of the Future
• 
  
•