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The-secret-of-perfect-auctions on Public Auction Finder
By: James Parker
Associate Contributor
November 17, 2020

The secret of perfect auctions

2020 Nobel Memorial Economics Prize awarded to Paul Milgrom and Robert Wilson.

The Nobel Prize is awarded to Stanford University professors Paul Milgrom and Robert Wilson. They improved the theory of auctions and invented new auction formats.

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Milgrom and Wilson not only developed the theory of auctions but also put it into practice. In a press release, the Nobel Committee highlighted their contribution to organizing the first US auction to sell cellular operators' frequencies. Until 1994, frequencies were played in a lottery, and as a result, operators were given disparate frequencies in different states. The state earned practically nothing. The new auction format, proposed by Milgrom and Wilson, allowed operators to get a package of frequencies convenient for them and the state worth around $617 million for 10 licenses.

Milgrom has advised the USA, Canada, Mexico, Great Britain, Germany, Australia, and others. He also works with companies. In preparing Google for the IPO, the company's co-founder called him into a consultant, judging that the IPO was like auctions. And Yahoo! and Microsoft use Milgrom's advice to understand how to sell online ads.

Milgrom plays not only on the side of the sellers. In 2006, he led a consulting team for Comcast's Spectrum Co. Compared to how much other significant traders such as T-Mobile and Verizon paid for frequencies back then, Spectrum saved about $ 1.2 billion. Its tactics included unexpected moves. They sharply raised the bid price by $ 750 million for one step of the auction. After that auction, the FCC was forced to change the auctions' rules, limiting the size of the measure, according to the company founded by Milgrom Auctionomics.

One of the best auctions, which Auctionomics advised on the creation, took place in 2017. The US government bought a package of frequencies from TV companies for $ 10 billion. It sold them at an auction to mobile operators for $ 20 billion.

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