Economy

Nobel Prize in Economics goes to two professors who came up with new types of auctions

Since the advent of the internet, things have been constantly being sold through auctions. When it comes to ordinary consumer products, it is still quite simple: someone sells one good while interested parties can make a bid for it.

It gets more complicated when we look at the auctions of all kinds of goods and services in business that are currently being auctioned: electricity, emission certificates and frequencies for telecommunications.

Paul Milgrom and Robert Wilson have improved the auction theory that maps the mechanisms behind auctions, for both simple auctions and complex auctions.

In doing so, they also looked for new ways to make complex auctions run smoothly. In 1994 they invented the simultaneous multi-round auction, which has since been used worldwide to auction all kinds of goods and services, such as telecom frequencies.

Listen here to the explanation given by economist Ivan Van de Cloot in “New facts” on Radio 1:

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