Paul Robert Milgrom (born April 20, 1948) is an American economist. He is the Shirley and Leonard Ely Professor of Humanities and Sciences at the Stanford University School of Humanities and Sciences, a position he has held since 1987. He is a professor in the Stanford School of Engineering as well and a Senior Fellow at the Stanford Institute for Economic Research. Milgrom is an expert in game theory, specifically auction theory and pricing strategies. He is the winner of the 2020 Nobel Memorial Prize in Economic Sciences, together with Robert B. Wilson, "for improvements to auction theory and inventions of new auction formats". He is the co-creator of the no-trade theorem with Nancy Stokey. He is the co-founder of several companies, the most recent of which, Auctionomics, provides software and services for commercial auctions and exchanges. Milgrom and his thesis advisor Wilson designed the auction protocol the FCC uses to determine which phone company gets what cellular frequencies. Milgrom also led the team that designed the broadcast incentive auction between 2016 and 2017, which was a two-sided auction to reallocate radio frequencies from TV broadcast to wireless broadband uses. In 2024, Milgrom's firm, Auctionomics, won a technical Emmy Award for their contributions to spectrum auction design.
Early life and education Paul Milgrom was born in Detroit, Michigan, April 20, 1948, the second of four sons to Jewish parents Abraham Isaac Milgrom and Anne Lillian Finkelstein. His family moved to Oak Park, Michigan, and Milgrom attended the Dewey Elementary School and then Oak Park High School. Milgrom had a strong interest in math from a young age, which was fostered by his teachers. He attended the Ross summer math camp at Ohio State University in 1965, where he finished number one in his class. Milgrom graduated from the University of Michigan in 1970 with a B.A. in mathematics. He worked as an actuary for several years in San Francisco at the Metropolitan Insurance Company and then at the Nelson and Warren consultancy in Columbus, Ohio. Milgrom became a Fellow of the Society of Actuaries in 1974. In 1975, Milgrom enrolled for graduate studies at Stanford University and earned an M.S. in statistics in 1978 and a Ph.D. in business in 1979.
Academic career Milgrom assumed a teaching position at the Kellogg School of Management at Northwestern University where he served from 1979 to 1983. At Northwestern, Milgrom was part of a group of professors including future Nobel laureates Roger Myerson and Bengt Holmstrom, along with Nancy Stokey, Robert J. Weber, John Roberts and Mark Satterthwaite that helped to bring game theory and information economics to bear on a wide range of problems in economics such as pricing, auctions, financial markets, and industrial organization. Weber recounted his collaboration with Milgrom. During what was supposed to be a brief meeting to ponder a problem faced by Weber, Milgrom had a key insight. Weber wrote, "And there, in a matter of a few minutes, was the heart of our first two joint papers." From 1982 to 1987, Milgrom was a professor of economics and management at Yale University. In 1987, Milgrom returned as an economics professor to his alma mater, Stanford University, where he is currently the Shirley and Leonard Ely Professor of Humanities and Sciences in the Department of Economics. Milgrom held editorial positions at the American Economic Review, Econometrica and the Journal of Economic Theory. He became a Fellow of the Econometric Society in 1984, and the American Academy of Arts and Sciences in 1992. In 1996, he gave the Nobel memorial lecture honoring the laureate William Vickrey, who had died three days after the Nobel prize announcement. In 2006, Milgrom was elected to the National Academy of Sciences.
Awards and honors Milgrom received the Erwin Plein Nemmers Prize in Economics in 2008 "for contributions dramatically expanding the understanding of the role of information and incentives in a variety of settings, including auctions, the theory of the firm, and oligopolistic markets." He won the 2012 BBVA Foundation Frontiers of Knowledge Award in Economy, Finance and Management category "for his seminal contributions to an unusually wide range of fields of economics including auctions, market design, contracts and incentives, industrial economics, economics of organizations, finance, and game theory." In 2013, Milgrom was elected as Vice President of the American Economic Association. In 2014, he won a Golden Goose Award for his work involving auction design. In 2017, he won the CME Group-MSRI Prize in Innovative Quantitative Applications for his work in auction design. In 2020, he was appointed a Distinguished Fellow of the American Economic Association. In October 2020, Milgrom was the co-recipient of the 2020 Nobel Memorial Prize in Economic Sciences with Robert B. Wilson. The Royal Swedish Academy of Sciences stated that it awarded the Nobel Memorial Prize jointly to Milgrom and Wilson because they "used their insights to design new auction formats for goods and services that are difficult to sell in a traditional way, such as radio frequencies. Their discoveries have benefitted sellers, buyers and taxpayers around the world." The citation went on to say:
Game theory Milgrom made several fundamental contributions to game theory in the 1980s and 1990s on topics including the game-theoretic analysis of reputation formation, repeated games, supermodular games and learning in games.
Reputation formation In an influential 1982 paper with David M. Kreps, John Roberts, and Robert B. Wilson (Kreps et.al., 1982), Milgrom showed that if one or both players have even a very small probability of being committed to playing tit-for-tat, then in equilibrium both players cooperate until the last few periods. This is because even an uncommitted player has an incentive to "build a reputation" for being committed to tit-for-tat, as doing so makes the other player want to cooperate. The Kreps-Milgrom-Roberts-Wilson "Gang of Four" paper launched an entire branch of the game theory literature on such "reputation effects."
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