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Auction theory is a branch of applied economics that deals with how bidders act in auctions and researches how the features of auctions incentivise predictable outcomes. Auction theory is a tool used to inform the design of real-world auctions. Sellers use auction theory to raise higher revenues while allowing buyers to procure at a lower cost.
The second is auction theory and practice, where he examines the auctioning of interrelated items, such as radio spectrum, electricity, financial securities, rough diamonds, airport slots, and top-level domains. His work in bargaining and auctions is closely tied to his third theme: market design. His market design work concerns communications ...
Milgrom is an expert in game theory, specifically auction theory and pricing strategies. He is the winner of the 2020 Nobel Memorial Prize in Economic Sciences, together with Robert B. Wilson, "for improvements to auction theory and inventions of new auction formats". [2] [3] He is the co-creator of the no-trade theorem with Nancy Stokey.
His papers (many of which are co-authored with Jeremy Bulow) apply ideas from auction theory to other economic contexts, including finance and political economy. [ 7 ] [ 8 ] [ 9 ] He has also invented new auction designs, including the "Product Mix Auction" that is now in regular use by the Bank of England (currently used monthly). [ 10 ]
Robert Butler "Bob" Wilson, Jr. (born May 16, 1937) is an American economist who is the Adams Distinguished Professor of Management, Emeritus at Stanford University.He was jointly awarded the 2020 Nobel Memorial Prize in Economic Sciences, together with his Stanford colleague and former student Paul R. Milgrom, [2] "for improvements to auction theory and inventions of new auction formats".
The winner's curse is a phenomenon that may occur in common value auctions, where all bidders have the same value for an item but receive different private signals about this value and wherein the winner is the bidder with the most optimistic evaluation of the asset and therefore will tend to overestimate and overpay.
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Revenue equivalence is a concept in auction theory that states that given certain conditions, any mechanism that results in the same outcomes (i.e. allocates items to the same bidders) also has the same expected revenue.