Is economics a topic for the Nobel Prize?

2020 Nobel Prize in Economics US economists Milgrom and Wilson honored for research on auction theory

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This year's Nobel Prize in Economics goes to Paul R. Milgrom and Robert B. Wilson. The two US economists are honored for their improvements in auction theory and the invention of new auction formats.

Status: October 12, 2020 | archive

First, second and third: This year's Nobel Prize in Economics goes to economists Milgrom and Wilson, who with their auction theory laid the foundation for very practical applications.

The US economists used their models to show that auctions have to be designed differently, depending on the result they are to achieve. Is it a private auction that is driven by ideal motifs, such as paintings? Is it a deal - trying to get the highest price? Or is it about the distribution of social goods such as electricity, fishing licenses, emission rights or mobile phone licenses?

Here it is usually not a question of profit maximization, but also, among other things, the security of supply. In other words, it is not the highest bid that wins the bid, but those that satisfy several social needs for the transaction.

"It's about shaping the rules and institutions so that the results of market interactions maximize general welfare as much as possible."

IfW President Gabriel Felbermayr

Milgrom and Wilson's research was groundbreaking. And it is widely used in everyday life.

This is another award for US economic researchers. The US is way ahead when it comes to economic Nobel Prizes.

The Prize for Economics has a special position among the Nobel Prizes: It was only awarded for the first time in 1969. In 2009 a woman received this award for the first time. And the male winners clearly outnumbered economists who have worked at US universities or in the United States. Strictly speaking, the Nobel Prize for Economics is not a real Nobel Prize, because it does not go back to Alfred Nobel's will, but was only subsequently donated by the Swedish Reichsbank - "in memory of Alfred Nobel". The occasion was the bank's 300th birthday.

Prize winners in the margin and in the appendix

The chemist and industrialist Alfred Nobel himself, however, is said to have never been entirely comfortable with economics and therefore never worthy of prizes. However, as with the Nobel Prizes in Physics and Chemistry, the winners are nominated by the Royal Swedish Academy of Sciences and presented during the entire award ceremony. But their names appear in the list of Nobel Prize winners only in an appendix and are engraved on the edge of the Nobel Medal instead of on the surfaces of the Nobel Prize.

Business award winners in recent years

  • 2019: Abhijit Banerjee, Esther Duflo and Michael Kremer for their experimental theories in development economics
  • 2018: William D. Nordhaus and Paul M. Romer (both USA) for their theories on the connection between economic growth and environmental impacts as well as technical innovations
  • 2017: Richard H. Thaler (USA) for justifying behavioral economics
  • 2016: Oliver Hart (Great Britain) and Bengt Holmström (Finland) for their research on contract theory in business life
  • 2015:Angus Deaton (Scotland) for his groundbreaking work on consumption, poverty, inequality and health
  • 2014: Jean Tirole (France) for his work on market power and regulation, on "taming powerful companies"
  • 2013: Eugene F. Fama, Lars Peter Hansen, and Robert J. Shiller (all USA) for their empirical analysis of stock prices
  • 2012: Game theorists Alvin E. Roth (USA) and Lloyd S. Shapley (USA) for their fundamental knowledge of how different economic actors come together optimally for everyone.
  • 2011: Thomas Sargent and Christopher Sims for their empirical study of cause and effect in macroeconomics
  • 2010: P. Diamond, D. Mortensen, C. Pissarides: for their search theory for markets such as the labor market
  • 2009: Elinor Ostrom, Oliver Eaton Williamson, USA: for their studies on a conflict-free organization of markets
  • 2008: Paul Krugman, USA: for his studies as a trade theorist
  • 2007: Leonid Hurwicz, Eric Maskin, Rober Myerson, all USA: for developing the theory of Mechanism Design
  • 2006: Edmund Phelps, USA: for researching the relationship between price developments and the labor market
  • 2005: Robert Aumann, Israel and USA, Thomas Schelling, USA: for the further development of game theory on conflict situations
  • 2004: Finn Kydland, Norway, Edward Prescott, USA: for their contribution to dynamic macroeconomics
  • 2003: Robert Engle, USA, Clive Granger, Great Britain: for methods for analyzing economic time series
  • 2002: Daniel Kahneman, USA and Israel, Vernon Smith, USA: for introducing psychological approaches to economics
  • 2001: George Akerlof, Michal Spence, Joseph Stiglitz, all USA: for their analysis of markets of asymmetric information