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Among the numerous and prestigious Nobel Prize winners in 2020 sit Professor Wilson and Professor Milgrom. Whilst quite unassuming, this pair of economists have revolutionized the way in which people conduct auctions. Not that this will apply to those who pop onto eBay after hitting up online sportsbook sites in the US like Bovada. This is about the auctions governments run for macro resources. Not you buying second-hand electronics. However, their theory benefits you anyway.
As Nobel Prize winners in 2020, Wilson and Milgrom are responsible not just for a concept, but for accepted practice. This prize is not a reward for theory alone. There have been numerous successful real-world uses. Expanding out from Game Theory they looked at the value of sold items as a variable within the purchasing group. They thus faced what is called the “winners curse”. Where someone wins the auction by over-estimating the value of the item.
They have the item, but at a cost, the market didn’t really support it. This makes buyers cagey. So, the traditional sell-off lotteries and closed-bid auctions were inefficient. People bid low hoping to avoid the winner’s curse. A little like hedging your wagers by going each way at online betting sites in the US like Bovada. However, the value of the resource would be the same in the marketplace after the sale regardless of the cost. So our Nobel Winners in 2020 hatched a plan.
Removal Of Doubt Increases Bids & Confidence
They looked at what happened when the buyers all knew both the expected market value AND the value estimate each placed on the item for sale. Their theory proved better for buyers and sellers. The removal of the guesswork was a revolution. The Federal Communications Commission used it to sell of Radio Frequencies in the 1990s. That they are Nobel Prize winners in 2020 is a reflection of it working so well that everyone else adopted it over the next decade.
“The discipline of economics is depressingly out of touch. The Nobel Prize as a marker of excellence in the field needs to become reflective of our global community and address the most pressing issues of our time like the climate crisis, the pandemic or structural racial injustice – otherwise it risks becoming increasingly irrelevant.”
- Catriona Watson (Director of Rethinking Economics)
At least everyone trying to run a fair auction. Radio Frequency allocation may have begun this, but it has since expanded. The mineral rights for a given area for a given time. Carbon Emission credit distribution. These Nobel Prize winners in 2020 have touched us all. Governments now get better value from public resources, as do the companies buying them. It’s almost like a bet on sports in the US when you know the score ahead of time. There are no more dark clouds of doubt.
Committee Announces Nobel Prize Winners In 2020
Unusually criticism of their award was swift in arriving. Some complained that they got their prize for something that belonged in a bygone era. In a world facing a mammoth health crisis, to focus on capitalism’s levers seemed a little “out of touch”. Rethinking Economics went so far as to say it was “disappointing” the committee had rewarded; “two white men from the global north working on auction theory”. Which seems a little unfair on the Nobel Prize winners in 2020.
“Their basic research allowed them to invent entirely new auction formats.”
- Peter Fredriksson (Chair of the Nobel Prize Committee)
Nobel Prize winners in 2020 getting some criticism is not a surprise. There is always someone who isn’t happy about it. Of course, the chair of the Prize committee, Peter Fredriksson disagrees. “Their discoveries are of great benefit to society.” He said sternly, adding they had; “Practical applications which have spread globally.” Which is unarguably true. Their theory has helped every company in the US gambling laws of economics are on their side. Because now they can see if they are or not ahead of time.
We take a look at how the economics Nobel Prize winners in 2020 took Game Theory and used it to create a better marketplace for public resources all over the world.