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Paul Milgrom and Robert Wilson win the 2020 Nobel Prize in Economic Science

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American economists Paul R Milgrom and Robert B Wilson won the 2020 Nobel Prize in Economic Sciences
American economists Paul R Milgrom and Robert B Wilson won the 2020 Nobel Prize in Economic Sciences   -   Copyright  AP Photo
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American economists Paul R Milgrom and Robert B Wilson have been awarded the 2020 Nobel Prize in Economic Sciences for improvements to auction theory and inventions of new auction formats.

The economists studied how auctions work, designing new auction formats for goods and services that are difficult to sell in traditional ways, such as radio frequencies.

The Nobel committee said their discoveries have benefitted sellers, buyers and taxpayers around the world.

The prestigious award comes with a 10-million krona (€960,000) cash prize and a gold medal.

It is the final Nobel Prize to be announced this year.

The committee said Wilson's work showed “why rational bidders tend to place bids below their own best estimate of the common value,” that is, “the value which is uncertain beforehand but, in the end, is the same for everyone.”

“(Bidders) are worried about the winner’s curse — that is, about paying too much and losing out,” the committee said.

Milgrom developed a more general theory of auctions that takes into account was is known as the “private value” of what's being sold that can vary greatly from bidder to bidder.

Last year’s award went to two researchers from the Massachusetts Institute of Technology and a third from Harvard University, for their groundbreaking research into efforts to reduce global poverty.

On Monday, the Nobel Committee awarded the prize for physiology and medicine for discovering the liver-ravaging hepatitis C virus.

Tuesday’s prize for physics honored breakthroughs in understanding the mysteries of cosmic black holes, and the chemistry prize on Wednesday went to scientists behind a powerful gene-editing tool.

The literature prize was awarded to American poet Louise Glück on Thursday for her “candid and uncompromising” work.

The World Food Programme won the Nobel Peace Prize on Friday for its effort to combat hunger worldwide.