Two American Professors Win Nobel Prize In Economics
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When you hear the word auction, you might think of a cattle barn or an art gallery. But auctions are now used to selling everything from Internet search ads to carbon pollution credits. Two Stanford professors were awarded the Nobel Prize in economics today for research on designing better auctions. NPR's Scott Horsley reports.
SCOTT HORSLEY, BYLINE: Economist Robert Wilson was born in Geneva, Neb., and he came by his interest in auctions early on.
ROBERT WILSON: When I was a boy, I would go to the cattle auction on - every Saturday morning, sit up in the bleachers and watch the cows be paraded in.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED AUCTIONEER: Forty-nine, 49, 49, 49. Sold - 148 1/2.
HORSLEY: Buying or selling one steer at a time is not exactly the stuff of Nobel Prizes. But at Stanford, Wilson and his protege Paul Milgrom turned their attention to more complicated auctions for things like wireless telephone licenses, where the value might depend on a company's ability to assemble a nationwide network. The two put theory into practice in the 1990s, when they helped the FCC design auctions that raised more than a hundred billion dollars for the government.
Their work has also helped to design auctions for electricity and fishing permits, and they're thinking of ways it could be used to distribute medical supplies. Milgrom says markets don't automatically function the way you'd like them to, so it's important to have good rules.
PAUL MILGROM: All of us remember early in the pandemic the terrible disorganization we had in allocating, for example, respirators where the states were competing against each other and simply bidding up the prices. In times of crisis, we don't just want prices going through the roof. We need well-thought-out systems.
HORSLEY: Wilson and Milgrom are neighbors as well as colleagues. So after he got the congratulatory call from Sweden very early this morning, Wilson walked across the street to give Milgrom the good news. When he rang the doorbell, it automatically lit up Milgrom's cellphone, perhaps using some of the very spectrum the pair helped to auction off. Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.