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Stanford economists awarded Nobel Prize for work on auction theory

Stanford economists awarded Nobel Prize for work on auction theory

Stanford University professors Paul Milgrom and Robert Wilson have been awarded the 2020 Nobel Prize in economics for esoteric insights that have brought order to the power grid, mineral rights and other critical but complex parts of our economy.

Their discoveries pioneered a new approach to how auctions work – and now serve as the conceptual underpinning of bids for services that are difficult to sell in a traditional way, such as bands of radio spectrum and cell service licenses.

Their strategy can be used to improve the allocation of respirators and Personal Protective Equipment in future pandemics. In the early days of the COVID-19 crisis, states bid against each other for supplies, escalating prices and creating chaos.

When the Federal Communications Commission takes bids to allocate radio spectrum for fiercely competitive telecommunication licenses – cell phone rights in northern and southern California markets, for example – it enlists Milgrom’s and Wilson’s strategy.  This approach has been adopted in countries around the world.

“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,” Peter Fredriksson, chair of the Nobel prize committee, said in a statement.

Neighbors on campus, the two long-time friends and collaborators were startled by Monday morning’s news. Wilson, professor emeritus at the Stanford Graduate School of Business, was Milgrom’s mentor. Milgrom is a professor in the university’s School of Humanities and Sciences.

Wilson’s phone ringer was on ‘silent’ mode, so the Nobel committee called his wife instead. Milgrom, sound asleep, was also incommunicado.

In the predawn darkness at 2:15 a.m., Wilson and his wife Mary crossed the street and repeatedly rang the video-activated doorbell to awaken Milgrom. The drama is recorded on Milgrom’s Nest home security

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Nobel Prize in Economics awarded to Milgrom and Wilson for auction theory work – business live | Business

Nobel Prize in Economics awarded to Milgrom and Wilson for auction theory work – business live | Business

A Jobcentre Plus in London.

A Jobcentre Plus in London. Photograph: Yui Mok/PA

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Britain faces a surge in unemployment before Christmas, economists fear, as business struggle under lockdown restrictions and the government prepares new rules for areas where Covid-19 is the biggest threat.

The CEBR thinktank is warning this morning that at least 1.25 million more people are at risk of losing their jobs by Christmas, as it hikes its Christmas unemployment forecast.

With Covid-19 still battering the economy, more companies will be forced to lay staff off – particularly those who were furloughed since the lockdown.

As CEBR warns…


The job market outlook is negative for the coming months…

…the coming winter looks set to be a tough one.

That would push the jobless total towards three million – up from 1.4m this summer. It would drive the unemployment rate over 8% – for the first time in almost a decade.

UK unemployment rate

UK unemployment rate Photograph: ONS

The CEBR has calculated that 1.2m furloughed workers are at risk being laid off when the scheme expires at the end of the month, and that a further 300,000 are likely to be made redundant.

Worryingly, the CEBR doesn’t believe the government’s latest initiative — a new local furlough scheme for the hospitality industry announced on Friday afternoon — will make a major difference. It might save 250,000 jobs – or one-in-six of those at risk.

They explained:


The newly announced furlough scheme is well targeted to soften the blow for businesses in the hospitality sector which now seem most at risk from another shut down. However, from March/ April we know that there are a range of economic knock-on effects from lockdowns and not all businesses in need

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