Nobel Laureates Highlight: Milgrom and Wilson

Paul R. Milgrom and Robert B. Wilson

Life of Robert Wilson

Robert Butler Wilson was born in Geneva, Nebraska on May 16, 1937.  After graduating from Lincoln Highschool, he earned a full scholarship to enter Harvard's Bachelor of Arts program. He continued at Harvard Business school to complete his MBA and DBA. Robert is well known for his doctoral thesis in sequential quadratic programming, which became a leading iterative method for nonlinear programming. His paper “The Theory of the Syndicates" impacted an entire generation of economics and finance students.

Life of Paul R. Milgrom

Paul Robert Milgrom was born on April 20, 1948, in Detroit, Michigan. He is the second of four sons to Jewish parents Abraham Isaac Milgrom and Anne Lillian Finkelstein. Paul graduated with an AB in mathematics from the University of Michigan in 1970 and went on to earn an MS in statistics and a Ph.D. in Business at Stanford. Paul is the co-founder of many companies, his most recent being Auctionomics. He is also the co-creator of the no-trade theorem with Nancy Stokey.

Work of Robert B. Wilson:

Robert Wilson and Paul Milgrom are both imperative figures in auction and game theory. Robert formulated the theory for auctions of objects with a common value – a value that is initially uncertain but turns out to be the same for everyone at the end. Some examples include the volume of minerals in a particular area or the future value of radio frequencies.

Furthermore, Wilson showed why rational bidders have a tendency to make bids below their own best estimate of the common value: they are concerned about the winner’s curse – paying too much and losing out.

Work of Paul R. Milgrom

Paul Milgrom developed a more general theory of auctions that allows both common and private values. He analyzed bidding strategies in a variety of popular auction formats and demonstrated that the format which will give sellers the highest expected revenue requires the bidders to know about each other’s estimated values while bidding. 

Both Robert’s and Paul’s work has been applied numerously by governments across the globe. It has enabled the government to efficiently allocate complex public resources such as electricity, broadband and radiofrequency, and natural resources. Their most famous application was in 1994 when the US authorities first used one of their auction formats to sell radio frequencies to telecom operators.

Disclaimer: The excerpts above and accompanying pictures are courtesy of the Nobel Foundation. To learn more, visit www.nobelprize.org/prizes/economic-sciences/.