The Nobel Prize in Economics
“Research is creating new knowledge” -Neil Armstrong
Universities in the United States have dominated the economics field over the years. This year is no different with Paul Milgrom and Robert Wilson, professors at Stanford University in California having been awarded the Nobel Prize in Economics for their work on auction theory.
There has been a total of 91 Nobel laureates in the economics since this initiative was founded in 1969. Since then, 57 of them have come from the U.S.
Is there something in the water?
The dynamic duo out of Stanford University pioneered auction theory. They invented new formats and structures that have been used to better allocate resources such as radio frequencies and carbon emission allowances.
Robert Wilson used game theory to establish the best bidding strategy in common value auctions and unveiled that it leads to low bids as buyers try to avoid the “winner’s curse”.
According to Investopedia.com, the “winner’s curse” is defined as a tendency for the winning bid to exceed the intrinsic value of an item.” This led to the creation of entirely new auction formats.
These breakthroughs have since been adopted by countries all over the world and has put the names of Paul Milgrom and Robert Wilson on the map.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.