Stanford economists among Golden Goose winners
Stanford economists Robert Wilson and Paul Milgrom have been chosen for the 2014 Golden Goose Award. The award honors scientists whose research was funded by the federal government and has benefited society in important but sometimes unexpected ways. Wilson and Milgrom introduced the initial design for sales of radio spectrum licenses in the United States.
Two Stanford economists were chosen Thursday to receive the third annual Golden Goose Award, which celebrates scholars whose seemingly obscure federally funded research yielded significant benefits for society.
Robert Wilson and Paul Milgrom were honored for their highly theoretical work on game theory and auctions, and their ability to apply that work to enable the Federal Communications Commission to auction off the nation's telecommunications spectrum, a highly complex technical challenge.
Wilson is the Adams Distinguished Professor of Management, Emeritus, at Stanford Graduate School of Business. Milgrom is the Shirley R. and Leonard W. Ely Jr. Professor in the School of Humanities and Sciences. Wilson was Milgrom's doctoral thesis adviser at Stanford.
An award ceremony will take place Sept. 18 on Capitol Hill. Wilson and Milgrom will share the tribute with their colleague, R. Preston McAfee, currently chief economist at Microsoft, who also helped create the auction design.
According to the Golden Goose Award announcement, their auction design resulted in fairness and efficiency in telecommunications networks and marketplaces in the United States and around the world. The novelty arises from the simultaneous sale of multiple items.
As a result, the FCC has conducted more than 87 spectrum auctions and has raised over $60 billion for the federal government, while also providing a diverse offering of wireless communication services to the public.
The Golden Goose Award announcement describe the auctions as collectively the greatest in history: "The economic activity they have made possible, and the changes they have made in the way Americans live, seem incalculable – and not at all theoretical. Game theory has come a very long way indeed."
Wilson's research and teaching focus on market design, pricing and negotiation. He has been a major contributor to auction designs and competitive bidding strategies in the oil, communication and power industries, and to the design of innovative pricing schemes.
Wilson said, "Game theory influenced the design of the FCC's spectrum auctions, and designs of many other markets over the past 20 years. I'm glad to see awards to Paul Milgrom and Preston McAfee for auction markets, and last year to Al Roth [a Stanford economist] and Lloyd Shapley [a UCLA economist] for designs of matching markets, since they led development of innovative market designs."
Wilson noted that the basic theories he's worked on for 50 years at Stanford would "seem dry without the reflected glow from their practical achievements." He expects more successes from improved market designs, he said.
Milgrom added, "It feels amazing to be honored along with Bob Wilson this way. He was the true pioneer among us, not only in doing fundamental work on game theory but also for being one of the first to apply it to study real markets and then for putting it to work, making recommendations to the U.S. Department of Interior for oil and gas auctions and to guide bidders' decisions in high stakes auctions."
Like Wilson, Milgrom is optimistic about future uses: "Keep watching – the impact of [game] theory will continue to increase, and applications will continue to inspire fundamental research."
Last year, Alvin Roth, the Craig and Susan McCaw Professor of Economics and senior fellow at the Stanford Institute for Economic Policy Research, was a co-winner of the Golden Goose Award for his application of economic theory to create the national kidney exchange and other matching programs.