NOBEL PRIZE IN ECONOMICS
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is an economics prize administered by the Nobel Foundation and generally regarded as the Nobel award for Economics. The prize was established in 1968 by a donation from Sweden's central bank Sveriges Riksbank to the Nobel Foundation to commemorate the bank's 300th anniversary. As it is not one of the prizes that Alfred Nobel established in his will in 1895, it is not a Nobel Prize. However, it is administered and referred to along with the Nobel Prizes by the Nobel Foundation. Laureates are announced with the Nobel Prize laureates, and receive the award at the same ceremony
FIRST NOBEL LAUREATES IN ECONOMICS
• Laureates in the Memorial Prize in Economics are selected by the Royal Swedish Academy of Sciences. It was first awarded in 1969 to Dutch economist Jan Tinbergen and Norwegian economist Ragnar Frisch "for having developed and applied dynamic models for the analysis of economic processes".
• Amartya Sen was the first Indian to be awarded the Nobel Prize in Economics for his work on welfare economics. He has written many books – the Argumentative Indian being one of them. Amartya Sen was the fourth Indian to bring a Nobel Prize to India. Amartya Sen has always been in the news for his vociferous criticism of Indian politics and economics.
• Recently, Abhijit Banerjee who was born in India but currently he has citizenship of USA has won the Nobel Prize in Economics jointly with his wife Esther Duflo and American Michael Kremer for their experimental approach to alleviating global poverty.
NOBEL PRIZE IN ECONOMICS 2020
The 2020 Nobel Prize in Economic Sciences has been awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of 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. Their discoveries are of great benefit to society.
Robert Wilson who is an American economist and the Adams Distinguished Professor of Management, Emeritus at Stanford University awarded this year’s Prize in Economic Sciences, 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.
2020 Economic Sciences Laureate Paul Milgrom is an American economist. He is the Shirley and Leonard Ely Professor of Humanities and Sciences at Stanford University, a position he has held since 1987. Milgrom is an expert in game theory, specifically auction theory and pricing strategies & he was conferred with Nobel Prize as he formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder.
This year’s Economic Science Laureates -- Paul Milgrom and Robert Wilson -- have not just clarified how auctions work and why bidders behave in a certain way, but used their theoretical discoveries to invent entirely new auction formats for the sale of goods and services.
WHAT IS AUCTION THEORY?
The outcome of an auction (or procurement) depends on three factors -- the first is the auction’s rules, or format. Are the bids open or closed? How many times can participants bid in the auction? What price does the winner pay – their own bid or the second-highest bid? The second factor relates to the auctioned object. Does it have a different value for each bidder, or do they value the object in the same way? The third factor concerns uncertainty. What information do different bidders have about the object’s value? Using auction theory, it is possible to explain how these three factors govern the bidders’ strategic behaviour and thus the auction’s outcome. The theory can also show how to design an auction to create as much value as possible. Both tasks are particularly difficult when multiple related objects are auctioned off at the same time. This year’s Laureates in Economic Sciences have made auction theory more applicable in practice through the creation of new, bespoke auction formats.
NOBEL PRIZE IN ECONOMICS AWARDED TO NON- ECONOMIST
In 1995, the Nobel Prize for Economics was awarded to John Forbes Nash. He was a mathematician who made contributions towards differential geometry, game theory and study of partial differential equations. He is the only person to receive the Abel Prize and the Nobel Prize for Economics. He was awarded with the Nobel Prize for his work on non-linear differential equations. It was in 1995, for the first time, the Nobel Prize for Economics was redefined as a prize in social science. The first time, a non-economist Herbert A Simon received the prize in 1978. He was a PhD holder in political Science. Also, Daniel Kahneman, a professor of psychology won the Nobel Prize for economics.
QUESTIONS (1-5)
Q.1 Earlier there were 5 categories in Nobel Prize. Later, in which year Economics was also added as a category for the Nobel Prize?
A. 1962
B. 1965
C. 1967
D. 1968: ANSWER
Q.2 Which of the following institutions or committees select or confer awards to the Nobel Laureates with Nobel Prize in Economics?
A. Sveriges Riksbank: ANSWER
B. Royal Swedish Academy of Sciences
C. Norwegian Nobel Committee
D. The Swedish Academy
Q.3 Which of the following was the First Indian to be awarded with Nobel Prize in Economics?
A. Amartya Sen: ANSWER
B. Rangarajan
C. Abhijit Banerjee
D. PC Mahalanobis
Q.4 _________ & _________ were the American Economists and Nobel Laureates that are awarded with Nobel Prize in Economics 2020?
A. Eugene F. Fama & m Lars Peter Hansen
B. Abhijit Banerjee, Esther Duflo and Michael Kremer
C. Paul R. Milgrom and Robert B. Wilson: ANSWER
D. William D. Nordhaus and Paul M. Romer
Q.5 The 2020 Nobel Prize in Economic Sciences has been awarded to Paul R. Milgrom and Robert B. Wilson for making improvements in the field of?
A. Keynesian Theory
B. Auction Theory: ANSWER
C. Social Choice Theory
D. Theory of poverty
