Paul Milgrom facts for kids
Quick facts for kids
Paul Milgrom
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Milgrom in 2013
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| Born | April 20, 1948 |
| Education | University of Michigan (BA) Stanford University (MS, PhD) |
| Known for | Auction theory Incentive theory Market design |
| Spouse(s) | Eva Meyersson |
| Awards | Erwin Plein Nemmers Prize in Economics (2008) BBVA Foundation Frontiers of Knowledge Award (2012) Golden Goose Award (2014) Nobel Memorial Prize in Economic Sciences (2020) Technology and Engineering Emmy Awards (2024) |
| Scientific career | |
| Fields | Economics |
| Institutions | Northwestern University (1979–1983) Yale University (1982–1987) Stanford University (1987–present) |
| Thesis | The structure of information in competitive bidding (1979) |
| Doctoral advisor | Robert B. Wilson |
| Doctoral students | Susan Athey Luís Cabral Joshua Gans Gillian Hadfield Li Shengwu |
| Academic career | |
| Information at IDEAS / RePEc | |
Paul Robert Milgrom (born April 20, 1948) is an American economist. He is a professor at Stanford University. He has been there since 1987. Milgrom is an expert in game theory. This field studies how people make decisions when their choices affect others. He focuses on auction theory and pricing.
In 2020, he won the Nobel Memorial Prize in Economic Sciences. He shared it with Robert B. Wilson. They won for making auctions better and creating new ways to run them. Milgrom also helped start a company called Auctionomics. It helps businesses with their auctions.
Milgrom and his teacher, Robert Wilson, created the auction rules for the FCC. The FCC is a US government agency. They use these rules to sell cellular frequencies to phone companies. Milgrom also led the team that designed a big auction in 2016-2017. This auction helped move radio frequencies from TV to wireless internet. In 2024, his company, Auctionomics, won an Emmy Award. This was for their work on auction design.
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Early Life and School
Paul Milgrom was born in Detroit, Michigan, on April 20, 1948. He was the second of four sons. His family later moved to Oak Park, Michigan. Paul went to Dewey Elementary School and then Oak Park High School.
He loved math from a young age. His teachers helped him grow this interest. In 1965, he was the top student at a summer math camp.
Milgrom graduated from the University of Michigan in 1970. He earned a degree in mathematics. For several years, he worked as an actuary. Actuaries are people who analyze financial risks. He worked in San Francisco and Columbus, Ohio. In 1975, Milgrom went to Stanford University. He earned a master's degree in statistics in 1978. He then got his PhD in business in 1979.
His Work as a Professor
Milgrom started teaching at Northwestern University in 1979. He was part of a group of professors. They used game theory and information economics. This helped solve problems in areas like pricing and auctions.
From 1982 to 1987, Milgrom taught at Yale University. In 1987, he returned to Stanford University. He is still a professor there today. He also worked as an editor for important economic journals. In 2006, he joined the National Academy of Sciences.
Awards and Special Honors
Milgrom has received many awards for his work.
- In 2008, he won the Erwin Plein Nemmers Prize in Economics. This was for helping us understand how information and incentives work.
- In 2012, he won the BBVA Foundation Frontiers of Knowledge Award. This award recognized his wide-ranging work. It included auctions, market design, and game theory.
- In 2014, he won a Golden Goose Award. This was for his work on auction design.
- In 2020, he received the Nobel Memorial Prize in Economic Sciences. He shared it with Robert Wilson. They were honored for making auctions better. Their ideas helped sell things like radio frequencies. These discoveries have helped sellers, buyers, and taxpayers worldwide.
The Nobel committee said Milgrom created a general theory of auctions. This theory includes both common values and private values. He showed that sellers get more money when bidders learn more during the auction. Milgrom and Wilson also invented new ways to auction many related items at once. This helps sellers who want to benefit society, not just make the most money. The US government first used their auction ideas in 1994. Many other countries have used them since.
Game Theory Insights
Milgrom made big contributions to game theory in the 1980s and 1990s. He studied how people build a good reputation. He also looked at how people learn in games.
Building a Reputation
In a famous 1982 paper, Milgrom and others showed something interesting. If players might be committed to playing fair, then everyone cooperates. This is because even a player who isn't committed wants to "build a reputation" for being fair. This makes others want to cooperate too.
Learning in Games
Milgrom and his colleague John Roberts studied how people learn in games. They looked at how players make choices over time. They showed that if players learn from past actions, they can reach a stable outcome. This helps us understand how people make decisions in real-world situations.
Market Design
Milgrom describes Market Design as a type of "economic engineering." It uses research, game theory, and computer programs. It helps create better ways for markets to work.
His work in this area includes:
- Auction theory: How to design auctions for different items.
- Matching theory: How to match buyers and sellers.
- Making things simpler: How to make it easier for people to take part in markets.
Understanding Organizations
Milgrom also studied how organizations work. He looked at how to create good incentive plans for employees. He also studied how information flows within companies.
Incentive Plans
With Bengt Holmstrom, Milgrom looked at how to pay employees. They found that simple payment plans can work best. This is true when employees can see how their work affects results over time. They also showed that rewarding one task too much can make employees ignore other important tasks. This means companies might offer lower incentives overall. This helps make sure all tasks get attention.
They also discussed how this applies to teacher pay. If teachers are only paid based on test scores, they might focus only on what's on the test. They might ignore other important skills like creativity.
Information in Companies
Milgrom studied how information is shared. He showed that people often reveal all their information if they can prove it. This is called the "unraveling result." It happens because if someone hides good information, others will assume the worst. This idea helps us understand things like sales, court cases, and financial reporting.
Milgrom and John Roberts also looked at how different parts of a company work together. They found that activities are often "complementary." This means doing one thing well helps other things work better. For example, a company that changes its products often needs flexible workers. This idea helps explain why companies change slowly. If you change one part, other parts might get worse first.
Helping with Policy
Milgrom has played a big role in designing real-world auctions.
FCC Spectrum Auctions
Before 1993, the US government used slow methods to sell radio licenses. These methods were not good at finding the best owners. In 1993, Congress allowed the FCC to use auctions. But there was no good auction design for this.
Milgrom, Robert Wilson, and others helped design a new auction. It was called the "simultaneous multiple round" (SMR) auction. This design allowed many licenses to be sold at once. It also let bidders see what others were doing. This helped make sure the licenses went to the best companies. It also brought money to US taxpayers.
Milgrom argued for a rule where all parts of the auction close at the same time. This helps bidders plan better. He also helped create an "activity rule." This rule makes sure bidders stay active. If they don't, they lose the right to bid later. This stops bidders from just waiting and watching.
The SMR auction design has been used worldwide. It has helped auction radio spectrum, electricity, and natural gas. Billions of dollars have been raised using this design.
FCC Incentive Auctions
In 2012, Congress allowed the FCC to hold "incentive auctions." These auctions are special. TV stations can offer to give up their spectrum rights. Then, the government sells these rights to wireless companies. The money from the sales pays the TV stations. Any extra money goes to the US Treasury.
Milgrom was chosen to lead the team advising the FCC on this auction design. This was a very complex auction. It was the first time a "double auction" like this was used.
Teaching Others
Milgrom has taught many economics courses. He created a popular course on "The Modern Firm." He also taught the first graduate course on "Market Design" with Alvin E. Roth. This course helped start the whole field of market design.
Milgrom always taught students to think about what economic models can and cannot do. He stressed that models are useful tools. But they have limits. He encouraged students to think about how people really make choices.
Business Ventures
Milgrom has been involved in designing large auctions for over 20 years. He worked with Robert Wilson to create the FCC's first radio spectrum auctions. He has advised governments in many countries on spectrum auctions. He also advised Microsoft and Google on their advertising auctions.
In 2006, Milgrom helped Comcast bid in an FCC auction. His special software helped them save almost $1.2 billion. In 2007, he co-founded Auctionomics. This company designs auctions and advises bidders.
In 2009, Milgrom developed "assignment auctions and exchanges." These are fast ways to trade items. In 2011, the FCC hired Auctionomics to design the complex incentive auction. Milgrom has also been awarded four patents for his auction designs.
Images for kids
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Milgrom in 2013
See also
In Spanish: Paul Milgrom para niños
- List of Jewish Nobel laureates
