The 2020 Nobel Prize in Economics was on Monday awarded to American economists, Paul R. Milgrom and Robert B. Wilson "for improvements to auction theory and inventions of new auction formats".

According to the Royal Swedish Academy of Science, Wilson has awarded this year's Prize in Economic Sciences as he "showed why rational bidders tend to place bids below their own best estimate of the common value: they are worried about the winner's curse – that is, about paying too much and losing out".

Meanwhile, Milgrom "formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder".

Milgrom and Wilson are both from Stanford University.

"This year's Laureates in Economic Sciences started out with fundamental theory and later used their results in practical applications, which have spread globally. Their discoveries are of great benefit to society," says Peter Fredriksson, chair of the Prize Committee..