Kalindi College Economics Society

  AUCTION THEORY  American economists Paul R. Milgrom and Robert B. Wilson, both of whom teach at Stanford University, were awarded the 2020 economics Nobel Prize. This year’s Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to the duo “for improvements to auction theory and inventions of new auction formats”. The Nobel Prize committee noted that Dr. Milgrom and Dr. Wilson did not just come up with original ideas in auction theory, but they also played a crucial role in implementing their ideas.  INTRODUCTION Auction theory is an applied branch of economics which deals with how people act in auction markets and researches the properties of auction markets. Essentially, it is about how auctions lead to the discovery of the price of a commodity. Auction theory studies how auctions are designed, what rules govern them, how bidders behave and what outcomes are achieved. The allocation of scarce resources, in turn, matters to economists becaus...