The 2021 Nobel Economics Prize has been awarded to Robert Wilson and Paul Milgrom for their work in analyzing auctions and how to make them more efficient.

At the heart of the work for which Milgrom and Wilson have been awarded is the winner's curse. 【小题1】 . An example might be the right to mine a certain area for gold. If no gold is found, the right will be worthless; but if there turns out to be a lot of gold, it will be valuable. Different bidders may have different opinions about how much hold is on the site.The more optimistic they are, the more they will be willing to bid. The most optimistic bid will win. But the true value is likely to turn out much closer to the average rather than the highest valuation,so winning bidders are likely to overpay.

Wilson's work has shown that the fear of the winner's curse leads rational bidders to bid less than the own valuation. 【小题2】 .Their final price will therefore be lower.

Milgrom built on this to examine the case of auctions where there is not only a common value but also a private value that differs between bidders. In focusing again on the winner's curse, Milgrom determined that English-style auctions, where the price starts low and is bid upward, are better at avoiding the winner's curse than Dutch-style auctions---where the price starts high and is bid downward.This is because bidders gain more information about an item's value during an English-style auction,as other bidders drop out. 【小题3】 .

How have such insights help society? For one thing, Milgrom and Wilson developed the Simultaneous Multiple Round Auction'(SMRA). In these auctions, all biddable items are offered at the same time and bidders can bid on any portion of the items.The SMRA is useful,for example,if a company wants to bid for a license in one area only if it can also have the license in another area.【小题4】 . Running auctions simultaneously allows governments to maximize the prices of valuable assets.This gives governments more money to spend on public services like health and education.