by Erik Sherman
Going once, going twice—the winners of this year’s Nobel Prize in Economic Sciences are two Stanford economists whose work lets the world make mobile phone calls, switch on a light, and buy and sell on eBay.
Robert Wilson and Paul Milgrom, are famous for their groundbreaking work on auction theory. They took the 2,500-year-old practice of selling goods to the highest bidder and transformed how they worked and how the world looked at a result.
One of the major areas they developed was analysis of how the rules that govern auctions affect the efficiency of the outcomes—how bidders get the value they want, sellers maximize their income, and the process can happen more easily and quickly. Then they found ways to move beyond the fast-talking and gavel-banging stereotype of an auction and into many new types that new rules could enable.
“Sometimes the invisible hand of the market needs help,” said Scott Kominers, an associate professor of business administration at the Harvard Business School. “Historically, [economics has] been a social science that’s deeply concerned with the real world but often not directly practical. They were real visionaries in understanding how economics could play this role.”
“Their work was absolutely pivotal,” said Brennan Platt, an associate professor of economics at Brigham Young University. The two are described as brilliant and more than one person told Zenger News that each of them could have conceivably won a Nobel for his other work.
A fundamental problem of auctions is that much important information is invisible. Bidders