DAILY NEWS ANALYSIS

GS-III : Economic Issues Fiscal Policy

18 October, 2020
5 Min Read

What did the 2020 Economics Nobel winners discover about auction theory?

Context:

American economists Paul R. Milgrom and Robert B. Wilson have been announced as the winners of the 2020 economics Nobel Prize/Sveriges Riksbank Prize.

Auction theory:

All economies have to figure out the allocation of the limited supply of resources to satisfy unlimited human needs.
Auctions are important because they are the most widely used and also the most efficient mechanism to allocate scarce resources in an economy.
Auctions help ensure that scarce resources are allocated to people who value it the most.
From the seller’s point of view, selling goods to the highest bidder helps the seller maximise his or her revenues.
Auctions happen almost everywhere in the modern world, some explicit like the auction of mining and spectrum licences and some implicit like the sale of goods and services.
Auction theory is a branch of economics that deals with auctions. Auction theory aims to improve seller revenues, increase benefits to consumers, or even achieve both these goals at the same time.

Winner’s curse

The most common criticism of auctions is that they can lead buyers to overpay for resources whose value is uncertain to them. This is popularly known as the ‘winner’s curse.

News:

The award recognizes the duo’s contributions to improvements to auction theory and inventions of new auction formats and also their implementation.
Milgrom and Dr Wilson, are most popular for their contribution to devising new, real-world auction formats. The combinatorial auctions designed by the duo, has been used to sell complex goods such as spectrum as bundles, instead of as individual units.
The contributions of Dr Milgrom and Dr Wilson have helped governments and private companies design their auctions better.
This has, in turn, helped in the better allocation of scarce resources and has also allowed the sellers to maximize their revenues while still ensuring that the buyers also stand to benefit.
This has proved to be an incentive for sellers to produce complex goods and has thus proved to be providing an impetus to the whole economy.

Source: TH

Join Our Telegram

US Resumes Nuclear Weapon Testing

Formation Day

03 Dec, 25
SHARE

On 1st November, eight Indian states—Andhra Pradesh, Chhattisgarh, Haryana, Karnataka, Kerala, Madhya Pradesh, Punjab, and Tamil Nadu—along with five Union Territories—Andaman and Nicobar Islands, Chandigarh, Delhi, Lakshadweep, and Puducherry—celebrate their Formation Day. This date marks an important milestone in India

Turtle (Kachhua) Wildlife Sanctuary

02 Dec, 25
SHARE

The Turtle Wildlife Sanctuary, also known as the Kachhua Sanctuary, is located in the Varanasi district of Uttar Pradesh. It is recognised as India’s first freshwater turtle wildlife sanctuary, established to conserve endangered turtle species and support the ecological health of the Ganga River. Location and Extent The sanctuary co

Introduction of AI and Computational Thinking (CT) in

02 Dec, 25
SHARE

The Ministry of Education plans to introduce Artificial Intelligence (AI) and Computational Thinking (CT) from Class 3 onwards in the 2026–27 academic year. This initiative is part of the National Curriculum Framework for School Education (NCF-SE) 2023 and aligns with the National Education Policy (NEP) 2020. The aim is to prepare student

Sal Tree

02 Dec, 25
SHARE

Scientists from the Environment Department of Himachal Pradesh University (HPU) in Shimla have recently revealed that the Sal tree (Shorea robusta) is the most effective natural air purifier for combating rising pollution levels. Their findings highlight the tree’s superior capacity to trap dust, absorb gases, and cleanse the air compared

US Resumes Nuclear Weapon Testing

02 Dec, 25
SHARE

The President of the United States has ordered the resumption of nuclear weapon testing after a gap of 33 years, the last test being in 1992. This decision marks a significant shift in global nuclear policy and has far-reaching implications for geopolitics, the environment, and international security. Status of Global Nuclear Weapon Testing

Quick Links Testimonials FAQ

Crash Course

Regular Modules 2024

Mains

Optional

What did the 2020 Economics Nobel winners discover about auction theory?

What did the 2020 Economics Nobel winners discover about auction theory?

Formation Day

Turtle (Kachhua) Wildlife Sanctuary

Introduction of AI and Computational Thinking (CT) in

Sal Tree

US Resumes Nuclear Weapon Testing

DNA

03 Dec,2025

Important GS Topics

Toppers

Search By Date

Top Editorials

UPSC Courses

Saarthi Mentorship Programme

Important Tags

Articles:Geography And Environment

Articles: History Culture Society

Articles: Governance & National Issues

Articles: IR & IO

Articles: Economic Development & Economic Issues

Articles: S&T Internal Security

Articles: Ethics & Others

Articles: Others

Newsletter Subscription

SMS Alerts

Important Links