Why Paul Milgrom Deserves This Year’s Nobel Prize in Economics
- All News
- Why Paul Milgrom Deserves This Year’s Nobel Prize in Economics
By Lilia Maliar
Professor of Economics
This week, Paul R. Milgrom, my former colleague at Stanford University, jointly with Robert B. Wilson, won the Nobel Prize in Economics “for improvements in auction theory and inventions of new auction formats.” I’ve long respected Paul’s work, was privileged to call him a colleague, and believe that his work reveals the potential of economics to do good in the world.
Paul’s research combines both analytical sophistication and empirical relevance deserving high admiration. He worked not only on fundamental auction theory but also on designing new auction formats in which standard formats (like English or Dutch auctions) cannot be applied. His papers were cited more than 100,000 times. A distinctive feature of his research is that it benefits all players — buyers, sellers, and society as a whole. For example, Paul designed the auction that the Federal Communications Commission used to sell radio frequencies to wireless telephone companies, raising more than $120 billion over 20 years. When Paul was awarded a prize for designing innovative auctions in 2017, I asked him why the prize is not tied to the amount of money his research helped raise.
I had several conversations with Paul about research; in particular, we discussed AI and economics. This year, I am organizing a session at the American Economic Association meeting in January 2021 on behalf of the Society for Computational Economics. The session is called “What AI can do in Economics.” I invited Paul to participate in our session, and he will be presenting a paper on computing equilibria in auction games, with applications to radio spectrum auctions.
At Stanford, Paul and I taught different sections of the same economics course, ECON 202 and 202N, to doctoral students. Paul taught economics majors, while I taught non-majors. Given how famous Paul was, I was afraid that all my students would switch to Paul’s class, but, fortunately, it never happened. I fondly remember him inviting Kenneth Arrow, a fellow Stanford professor and a Nobel laureate, to give a lecture on general equilibrium theory. Paul kindly invited my students to participate, so that they could also benefit from interactions with this remarkable researcher and educator.
Finally, I have an anecdotal story about my first exposure to Paul’s research. I completed my undergraduate studies in economics in the former Soviet Union. Before I entered in a Ph.D. program, I came to study Western economics in a summer school. Presuming that I knew economics, I chose to enroll in Advanced Industrial Organization which used Paul’s book, Economics, Organization and Management. Truth be told, I found the book very hard to follow. It was later, as I was earning my Ph.D. in economics, that I realized that economics in the former Soviet Union and the United States mean different things.
Paul gave me my first taste of U.S.-style economics. I didn’t realize then that I’d one day be his colleague. My heartiest congratulations to Paul Milgrom and Robert Wilson for their well-deserved prize.
Lilia Maliar is a professor of economics at The Graduate Center, CUNY.
Submitted on: OCT 14, 2020
Category: Economics | Faculty | GCstories | General GC News