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The Work of Milgrom and Wilson in the Theory and Practical Application of Auctions

Author

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  • Péter Biró

    (Institute of Economics of the Research Centre for Economics and Regional Studies)

  • Gyula Magyarkuti

    (Corvinus University of Budapest)

Abstract

This paper seeks to provide insight into the field of auction theory to the general readership, the area of the 2020 Nobel laureates in Economic Sciences, Paul Milgrom and Robert Wilson. To understand for what reasons and for what purpose they were awarded the Nobel Prize, it is worth taking a step back, looking at this area of economics from a greater distance. For this reason, we not only report the results associated specifically with their names here, but we also review the path to get here. Finally, we provide an outlook for the future of the topic with a brief description of the interdisciplinary areas of engineering economics and market design.

Suggested Citation

  • Péter Biró & Gyula Magyarkuti, 2021. "The Work of Milgrom and Wilson in the Theory and Practical Application of Auctions," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 20(1), pages 127-151.
    • Handle: RePEc:mnb:finrev:v:20:y:2021:i:1:p:127-151
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    References listed on IDEAS

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    1. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
    2. Robert Wilson, 2008. "Supply Function Equilibrium in a Constrained Transmission System," Operations Research, INFORMS, vol. 56(2), pages 369-382, April.
    3. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
    4. Hal R. Varian & Christopher Harris, 2014. "The VCG Auction in Theory and Practice," American Economic Review, American Economic Association, vol. 104(5), pages 442-445, May.
    5. Ausubel Lawrence M & Milgrom Paul R, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 1(1), pages 1-44, August.
    6. Jeremy T. Fox, 2018. "Estimating matching games with transfers," Quantitative Economics, Econometric Society, vol. 9(1), pages 1-38, March.
    7. Committee, Nobel Prize, 2020. "Improvements to auction theory and inventions of new auction formats," Nobel Prize in Economics documents 2020-2, Nobel Prize Committee.
    8. Monostori, Zoltán, 2013. "Diszkriminatív áras és egyenáras aukciók [Discriminatory and uniform-price auctions]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1048-1074.
    9. Haeringer, Guillaume, 2018. "Market Design: Auctions and Matching," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262037548, December.
    10. Martin Bichler & Douglas Ferrell & Vladimir Fux & Jacob K. Goeree, 2019. "Designing Environmental Markets for Trading Catch Shares," Interfaces, INFORMS, vol. 49(5), pages 324-337, September.
    11. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September.
    12. John H. Kagel & Yuanchuan Lien & Paul Milgrom, 2010. "Ascending Prices and Package Bidding: A Theoretical and Experimental Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 2(3), pages 160-185, August.
    13. Tamás Fleiner, 2003. "A Fixed-Point Approach to Stable Matchings and Some Applications," Mathematics of Operations Research, INFORMS, vol. 28(1), pages 103-126, February.
    14. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    15. Robert Wilson, 1979. "Auctions of Shares," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 675-689.
    16. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    17. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
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    Cited by:

    1. Alexander Teytelboym & Shengwu Li & Scott Duke Kominers & Mohammad Akbarpour & Piotr Dworczak, 2021. "Discovering Auctions: Contributions of Paul Milgrom and Robert Wilson," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 709-750, July.
    2. Zoltan Hermann & Hedvig Horvath & Attila Lindner, 2022. "Answering Causal Questions Using Observational Data - Achievements of the 2021 Nobel Laureates in Economics," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(1), pages 141-163.

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    More about this item

    Keywords

    auction; game theory; mechanism design; market design; engineering economics;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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