Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson*

Abstract

The 2020 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Paul R. Milgrom and Robert B. Wilson for “improvements to auction theory and inventions of new auction formats”. In this survey article, we review the contributions of the laureates, emphasizing the subtle interplay between deep theoretical questions and practical design challenges that resulted in one of the most successful fields of economics.

No Price Envy in the Multi-unit Object Allocation Problem with Non-quasi-linear Preferences

“…Auctions have been understood as the price discovery process by the interactions among the biddes and the seller(s) (Milgrom, 2017;Teytelboym et al, 2021). One of the virtues of the auctions held by the public sectors, such as spectrum auctions, car liscence auctions, etc., is to find "fair" prices of objects that are not traded in markets.…”

On the Reality of Signaling in Auctions

“…Their popularity stems from the fact that in most cases, they result in efficient allocation, are an effective tool for allocating scarce or perishable goods, and facilitate effective extraction of the bidders' evaluations [1]. Thus, in the last two decades, auctions have been widely discussed in the literature on both economics [2,3] and computer science [4,5]. Auctions are also used for many practical applications such as spectrum auctions, stock exchanges, ecommerce websites (e.g., eBay), online advertising, procurement auctions for governments, electricity markets, wireless sensor networks, art, and more.…”

“…(1) n ∈ {4, 5, 6, 7, 8}-the number of bidders who take part in the auction; (2) |WS| ∈ {3, 7}-the number of possible world states; (3) |T| ∈ {2, 5}-the number of possible bidder's types; and (4) V-the valuation matrix that holds each bidder's type valuation for each possible world state. All numerical values are expressed in terms of game points.…”