Paul Milgrom, an Oak Park High School graduate, received the award for his work on auction theory.
Paul Milgrom, a Jewish economist who was born and raised in Detroit, is one of two men to win the 2020 Nobel Prize in Economic Sciences for “improvements to auction theory and inventions of new auction formats.”
Milgrom, who has been the Shirley and Leonard Ely Jr. Professor of Humanities and Sciences at Stanford University since 1987, jointly received the honor along with Robert B. Wilson, an emeritus professor at Stanford. Wilson was originally Milgrom’s thesis advisor, and eventually became his collaborator.
Milgrom’s primary research has consisted of studying how auctions work, and using that to design new auction formats.
“This year’s Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally,” said Peter Fredriksson, chair of the Nobel Committee at the Royal Swedish Academy of Sciences. “Their discoveries are of great benefit to society.”
Milgrom, along with Wilson, has used his insights to design new auction formats for goods and services that are “difficult to sell in a traditional way,” such as radio frequencies, according to the Prize Committee. Milgrom and Wilson famously designed the auction protocol the Federal Communications Commission uses to determine which phone company gets what cellular frequencies.
Milgrom and Wilson invented new formats for auctioning off many interrelated objects simultaneously, on behalf of a seller motivated by broad societal benefit rather than maximal revenue, the academy said of the economists in a press release.
“Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder,” the Nobel committee said in the release. “He analysed the bidding strategies in a number of well-known auction formats, demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding.”
Milgrom was born in Detroit in April 1948, had his Bar Mitzvah in March 1961 at Congregation Beth Yehudah, and attended and graduated from Oak Park High School.
The archives of the Jewish News found in the William Davidson Digital Archive of Jewish Detroit History also indicate that, in 1965, Milgrom graduated from United Hebrew Schools High School in Detroit. That same year, he received a youth award from the Women’s Auxiliary of United Hebrew Schools. Milgrom was also a United Synagogue Youth (USY) freshman advisor at B’nai Moshe in 1966.
In 1970, Milgrom graduated from the University of Michigan with an A.B. in mathematics, and received both his M.S. in statistics in 1978 and his Ph.D. in business in 1979 from Stanford University.
The Prize amount is 10 million Swedish Kronor (about $1.1 million) and will be shared equally between the Laureates.