STOCKHOLM • US economists Paul Milgrom and Robert Wilson have won the 2020 Nobel Economics Prize for improvements to auction theory and inventions of new auction formats, the Royal Swedish Academy of Sciences said yesterday.

"The new auction formats are a beautiful example of how basic research can subsequently generate inventions that benefit society," the academy said in a statement.

The Nobel Prize's official website tweeted: "Auctions are everywhere and affect our everyday lives. This year's Economic Sciences Laureates, Paul Milgrom and Robert Wilson, have improved auction theory and invented new auction formats, benefiting sellers, buyers and taxpayers around the world."

New auction formats have been used for radio spectra, fishing quotas, aircraft landing slots and emissions allowances.

"It's very happy news, I'm very glad about it," Professor Wilson, 83, told a press conference in Stockholm by phone from his home in California.

Prof Wilson, who was born in Nebraska and studied at Harvard University, was the thesis adviser to his fellow winner.

Professor Milgrom, 72, was born in Detroit and earned his PhD in business at Stanford in 1978.

He and Prof Wilson, along with Dr Preston McAfee, are best known for the so-called simultaneous ascending auction, which was developed for the United States Federal Communications Commission's 1994 sale of spectrum.

The method has since been used to set prices on such things as electricity and petrol.

Prof Milgrom advised on Google's 2004 initial public offering, and has also been an adviser to Yahoo, Microsoft and governments across the world, according to his website.

Prof Wilson was questioned at the press conference on what was the last thing he bought at an auction.

"My wife points out to me, we bought ski boots on eBay," he said. "I guess that's an auction."

The economics prize, won by such luminaries as professors Paul Krugman and Milton Friedman in the past, is the final of six awards this year - one in which the Nobels have been overshadowed by the Covid-19 pandemic.

The traditional gala winners' dinner in December has been cancelled, and other parts of the celebrations are being held digitally to avoid the risk of spreading the infection.

The 10 million Swedish krona (S$1.54 million) economics prize is not one of the original five awards created in the 1895 will of industrialist and dynamite inventor Alfred Nobel, but was established by Sweden's central bank and first awarded in 1969.

The Norwegian Nobel Committee, however, plans to go ahead with an award ceremony, albeit in a reduced format because of the coronavirus pandemic, in Oslo on Dec 10, the anniversary of Nobel's death.

REUTERS, BLOOMBERG