Economists are Starting to Think Like Engineers
No longer just a bunch of arcane theories, the field of economics is providing solutions to real-world problems.
Figuring out auctions is just one way economists are becoming more useful.
Photographer: DOUG KANTER/AFPThe Nobel-prize-winning work of economic theorists Paul Milgrom and Robert Wilson of Stanford University on how to set up auctions shows how the field is evolving. No longer is economic theory merely a glorified way of using mathematics to tell allegories about the world -- now it has practical engineering applications.
As my Bloomberg Opinion colleague Scott Kominers notes, this year’s award is well-deserved and long-awaited. In fact, I had predicted Milgrom to win last year; he’s such a virtuoso that it was only a matter of time (Wilson, Milgrom’s thesis advisor, is certainly no slouch either). Milgrom’s work in finance theory, for example, illustrated why the ever-present fear of trading against someone who knows more than you do tends to make financial markets inefficient.