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:

*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."**

**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."

**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."

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

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)

"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

## No comments:

## Post a Comment

Note: Only a member of this blog may post a comment.