“Studying auctions like the Nobel did is very important for economics”


© Provided by Clarín

Studying the auctions and tenders from the Economy is not limited only to the United States, as was the case of the two Nobel laureates this Monday. In Argentina some economists investigate this branch of game theory and emphasize that it is one of the areas where theory complements very well with practice.

This is the case of the economist Federico Weinschelbaum, professor at the Universidad Torcuato Di Tella and researcher at Conicet, who studies the subject of auctions in Argentina. In dialogue with Clarín, he said that the winners of the Swedish Academy “are two people who know a lot about the subject. They are two gross types. Bob Wilson is a pioneer and even had two disciples who have received the Nobel before, such as Alvin Roth and Bengt Holmström ”.

As he explained, the study of auctions is of utmost importance. Without going any further, in all government regulations there are three types of purchases: direct, private tenders and open tenders. And there, in these questions, understanding how these types of markets develop is useful.

As he said, auctions and tenders are designed for where there is no market. “Then, either the ad hoc market is created and competition is incorporated before the assignment of who is going to do a certain work, for example, or in homogeneous goods it arises as an attempt at transparency, as for example, in public works”, He said.

He mentioned that, thus, “a very large part of the purchases are made through auctions, as for example, with new technologies, 4G of cell phones, the licensing of networks are made through tenders.”

Weinschelbaum addresses the subject of auctions and tenders from Argentina. Together with his colleague, Leandro Arozamena, they immersed themselves fully in investigating some of the edges of this field. Specifically, how corruption affects the different types of auctions and also the incidence of favoritism.

“For example, the impact of whether the Argentine government defines that a tender prefers a local company to an international one, due to the spillover effect, what implications does it have,” he advanced.

The Nobel Prize in Economics was awarded on Monday to Americans Paul Milgrom, 72, and Robert Wilson, 83, two experts in designing auction processes for products and services to help buyers and sellers find a deal.

Economic theory, specifically the branch of microeconomics – which studies in detail questions of contracts, prices and markets in the economy – made significant contributions to what is called the study of auctions in recent decades. Most of Milgrom and Wilson’s research on these issues was carried out almost 40 years ago, in the 1980s.

The “Bank of Sweden Prize in Economics in Memory of Alfred Nobel” was awarded to them for “improving auction theory and inventing new formats,” said the jury of the Swedish Academy of Sciences.

“Auctions are everywhere and affect our daily lives,” the jury said. At the award, Wilson admitted never having been present at an auction, only to hear in depth that it had indeed been the case. “Here my wife tells me that we bought some ski boots on eBay, I understand that this is an auction process.”

In the midst of the coronavirus pandemic, these economists, both Stanford professors, will receive the prize of 10 million Swedish crowns (about US $ 1.1 million) from their homes in the United States.


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