Telephone interview, October 2020
“We are both nerds in a certain way”
Telephone interview with Paul B. Milgrom following the announcement of the 2020 Prize in Economic Sciences on 12 October 2020. The interviewer is Adam Smith, Chief Scientific Officer of Nobel Media.
“He was the advisor everybody recommended you should have,” says Paul Milgrom of Robert Wilson, his PhD supervisor and now near neighbour in Palo Alto and co-Laureate in Economic Sciences. In this conversation, recorded 20 minutes after Milgrom had learned of his prize, he describes how it was Wilson who actually delivered the news, in person: “He and his wife just walked over and rang the doorbell.”
Adam Smith: Hello, am I speaking with Paul Milgrom?
PM: Yes, you are.
AS: This is Adam Smith calling from Nobelprize.org, the website of the Nobel Prize in Stockholm. Well, congratulations on the award of the Prize in Economic Sciences, which has just been announced in Stockholm.
PM: Well, thank you. Thank you very much.
AS: May I ask how you received the news?
PM: My doorbell rang, and Bob Wilson, who was the co-winner I understand, was knocking at my front door, because nobody was able to reach me. So that woke me up, 20 minutes ago or so.
AS: I think that might be a first, that one laureate comes knocking at the other laureate’s door. Are you … Do you live very close to each other then?
PM: Pretty much right across the street from each other.
AS: What a lovely way to receive the news.
PM: Yes, he and his wife just walked over and rang the doorbell, and I have a video doorbell, so I answered and it was him.
AS: Yeah, quite a way to be woken up.
PM: Yes, yeah, and now there’s lots and lots of stuff coming in.
AS: So, well you’ve already introduced the fact that it’s … you’re amazingly close to Robert Wilson. You were his student. It must be extraordinary to win with him.
PM: Yeah, it really is quite amazing. He was my PhD dissertation advisor, the… I picked the topic mainly to, you know, working on auctions for my PhD, mostly to get him interested in being my advisor. He was the advisor everybody recommended you should have. So I said okay I’ll try working on a problem of interest to him and he got excited about it, and here we are. And lots has happened in between.
AS: And what is it about the two of you that makes you work so well together? What’s the magic?
PM: Well it’s a really good question. I mean, I think we’re both a little bit … we’re both nerds in, you know, in a certain way. We … I don’t really know what to say about the magic between us. We haven’t done that many joint projects. I think probably … you know I haven’t seen what the Foundation has cited, but I’m guessing …
AS: So, the citation is “improvements to auction theory and inventions of new auction formats.”
PM: You know, I was not working on practical things at all in 1993 when Bob and I were both mostly interested in economic theory, and I remember the … there was a need for an auction for radio-spectrum in the US, there are now auctions for radio-spectrum all over the world, and Congress had just authorised it, and the … and nobody knew how to do it, because of the complexities involved and that particular design, and when people called me, I thought ‘well, I don’t know how to do it’, that’s you know, there’s all kind of practical details I don’t know anything about. And they asked me to look at the proposal that had been made, and I looked at it and said ‘well, I may not know the best way to do it, but I can do better than that’ and I started talking to Bob. People had no clue of how it … of how to even approach it, and so we put together a practical design which, you know, has subsequently been used round the world.
AS: And for so many other things more than just radio frequencies. People are terribly worried right at the moment about the economic effects of the pandemic. How does the work you’ve done together on auctions help policy makers improve individuals’ economic stability these days?
PM: Yeah, I mean, the special challenges now are about, you know, how to solve hard resource-allocation problems, and how to create markets that allocate goods efficiently. I mean the biggest challenges today are not those. The biggest challenges today are of course the medical challenges, the vaccine development, the way we will address the shortages that exist and taking care of displaced people that has resulted from the pandemic. So I wouldn’t say that it is directly relevant to solving the biggest … those biggest challenges. But then other big challenges today, like environmental resources, that … allocating those well, where efficient method design can be valuable.
AS: You are, of course, intimately connected with the Nobel Prize already because didn’t you meet your wife at the Nobel Prize banquet?
PM: Yes, yes, that’s correct. In 1996, I did.
AS: I guess soon enough, although not this year unfortunately, you’ll have the chance to be there again together. It’s been lovely to speak to you, and many, many congratulations.
PM: Thank you.
AS: Bye bye.
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Their work and discoveries range from the formation of black holes and genetic scissors to efforts to combat hunger and develop new auction formats.
See them all presented here.