On Monday morning Paul Milgrom, the co-founder of Auctionomics and a professor at Stanford University, was awarded the 2020 Nobel Memorial Prize in Economic Sciences.
He was woken up by Bob Wilson, who lives across the street and won the Nobel with him. Bob and his wife knocked saying “the Nobel committee is trying to reach you”. The Nest camera captured the surprise announcement.
At the same time Paul’s head of software development at Auctionomics, Yago Saez, was calling Paul’s co-founder dr Console Battilana in California from Spain saying “this is the call”. “What call?” “THE call”.
Paul, Bob and two other members of the Auctionomics team started celebrating in the back yard by the fire pit, shortly joined by the Stanford media team.
Some Nobel prizes are awarded for work that is purely theoretical, but Professor Milgrom’s work has changed the lives of everyday consumers across the globe. Each time that you use a cellphone, your mobile operator uses a certain bandwidth to transmit that information – picture invisible highways in the sky. The rights to access that bandwidth are sold worldwide in spectrum auctions. These auctions exist largely because Paul Milgrom asserted that is was possible to do so, and offered the world a blueprint for successful spectrum allocation: in 1993 Milgrom walked into a meeting at the Federal Communications Commission with a floppy disk in his hand that contained a coded “Simultaneous Multiple Round auction” featured an activity rule that he had invented. Founded upon this proof of concept, what was thought impossible – the simultaneous competitive sale of many geographic spectrum licenses – has since became standard practice, with hundreds of billions of dollars raised in spectrum auctions worldwide.
Auctionomics, the company that Professor Milgrom and Dr. Silvia Console Battilana co-founded 10 years ago, later led the team of economic advisers to the US FCC from 2012–2017. This included the design and software implementation of the Broadcast Incentive Auction; the forward auction of that reallocation raised $19.5 billion. And today now Paul Milgrom and his Auctionomics team are hard at work on further market design to help the U.S. win the race for 5G. The mid-band spectrum known as the “C-band” is technologically essential for 5G deployment, and is likely to determine whether the U.S. can maintain its technological edge over China and other countries. According to a recent study by economist Michael Mandel, 5G is expected to add $2.7 trillion to the US GDP by 2030; it will be the foundation that supports the next generation of infrastructure and President Trump has highlighted the need to win the race. But reallocating the C-band is even more complex than previous spectrum sales: the government does not currently own the rights, rather the satellite operators. Professor Milgrom is leading the design for a sale of C-band licenses that would be the ever first private spectrum auction, with analyst estimates of potential value up to $80 billion.
Paul Milgrom and his Auctionomics team have also helped bidders participating in spectrum auctions – in what one might call the biggest poker game ever, Paul Milgrom’s client saved $1.6 billion over its competitors in FCC auction 66.[1] In the Canadian 700 MHz auction in 2014, the Auctionomics client paid 1/5th in $/MHz-pop terms with respect to the larger bidder, saving the equivalent of CAD1.92 billion. Game theorists, computer scientists, cutting edge software and artificial intelligence simulators are all part of Paul’s daily work life, in addition to academic economists.
In the words of Kenneth Arrow, another illustrious Nobel laurates and past Auctionomics board member on Professor Milgrom’s book “Putting Auction Theory to Work”: “Paul Milgrom has combined fundamental work in economic theory and, in particular, the theory of auctions, with extensive practical participation in the auctions of the electromagnetic spectrum. This book is a brilliant synthesis of his own and others’ contributions to the field. The impact of practical problems on the need for theory is thoroughly exemplified. The exposition of the theory has that complete ease only achievable through complete mastery and intense work.”
Al Roth, Nobel Laureate in economics for market design and Auctionomics board member, gives us two quotes: “No one can do modern economic theory without encountering Paul’s foundational work across almost all areas of economics, most famously his seminal work on auctions. And he’s not “just” a theorist, he’s an extraordinary designer of successful spectrum auctions that have reshaped modern communications.” And the second one : “Finally”.
To conclude his co-founder Dr Silvia Console Battilana tells us “Paul did not only disrupt economic markets. In a world of billion dollar transactions he decided to pick a 29 year old entrepreneurial female PhD as his co-founder rather than a senior white male from Goldman Sachs. Paul led the way in spectrum auctions and female CEO presence in high stakes auctions”
Contact: Silvia Console Battilana, silviacb@auctionomics.com, +1650 704 1945 (text name and company before calling).
[1] https://web.stanford.edu/~jdlevin/Papers/AWS.pdf