U.S. economists win Nobel for auction research

Paul R. Milgrom and Robert B. Wilson of Stanford University researched how the format of an auction and the bidders’ mindsets affect the winner and final price. The Royal Swedish Academy of Sciences awarded the two Americans the Nobel Memorial Prize for economics on Monday. The men will split an award of more than $1 million.

Why are auctions so important? World governments, big corporations like Google, and countless retail websites use the auction format to sell products, ads, and even resources such as natural gas, electricity, and radio frequencies. Economists say products often go for less than they are worth at auction because buyers are scared of overpaying. Milgrom and Wilson argued that if sellers release more detailed merchandise information and even value estimates, it could result in higher and more accurate final prices.

Dig deeper: Listen to my profile on The World and Everything in It of a Christian auctioneer from South Dakota.