Paul Milgrom

Paul Milgrom
Milgrom in 2013
Paul Milgrom
Born	Paul Robert Milgrom 20 4, 1948
Birthplace	Detroit, Michigan, U.S.
Nationality	American
Occupation	Economist, professor, entrepreneur
Title	Shirley and Leonard Ely Professor of Humanities and Sciences
Employer	Stanford University
Known for	Auction theory, incentive theory, market design, no-trade theorem
Education	Stanford University (MS, PhD)
Spouse(s)	Eva Meyersson
Awards	Nobel Memorial Prize in Economic Sciences (2020), Technical Emmy Award (2024)
Website	[http://www.milgrom.net/ Official site]

Paul Robert Milgrom (born April 20, 1948) is an American economist and professor at Stanford University, where he holds the Shirley and Leonard Ely Professor of Humanities and Sciences chair in the School of Humanities and Sciences — a position he has occupied since 1987. He is also a professor in the Stanford School of Engineering and a Senior Fellow at the Stanford Institute for Economic Policy Research. Milgrom's contributions to game theory, auction theory, and market design have shaped both academic economics and major public-policy outcomes. In 2020, the Royal Swedish Academy of Sciences awarded Milgrom the Nobel Memorial Prize in Economic Sciences, shared with his doctoral advisor Robert B. Wilson, "for improvements to auction theory and inventions of new auction formats." Beyond his theoretical work, Milgrom has applied his research to practical auction design: he and Wilson designed the auction protocol the U.S. Federal Communications Commission uses to allocate cellular spectrum licenses, and he led the team that designed the FCC's broadcast incentive auction conducted between 2016 and 2017. He is also the co-founder of Auctionomics, a firm that provides software and services for commercial auctions and exchanges, and the co-creator of the no-trade theorem with economist Nancy Stokey.

Early Life

Paul Robert Milgrom was born on April 20, 1948, in Detroit, Michigan. He grew up in the Detroit metropolitan area during the post-war economic expansion that defined mid-century American industrial life. Details about Milgrom's family background and childhood have not been extensively documented in public sources; however, he has been identified as part of a generation of American economists who came of age during a period of rapid growth in mathematical and quantitative approaches to economic analysis.

Milgrom's early intellectual interests gravitated toward mathematics and analytical reasoning, skills that would later define his academic career. Detroit, as one of the major centers of American manufacturing and commerce, provided an environment in which questions about markets, competition, and pricing were part of the broader cultural fabric. These formative years in Michigan preceded Milgrom's undergraduate education at the University of Michigan, where he would begin to formalize his interests in economics and mathematics.

Education

Milgrom received his Bachelor of Arts degree from the University of Michigan. He subsequently enrolled at Stanford University for graduate study, where he earned both a Master of Science degree and a Doctor of Philosophy degree in economics. His doctoral dissertation, titled The Structure of Information in Competitive Bidding, was completed in 1979 under the supervision of Robert B. Wilson. The dissertation examined how information asymmetries affect the behavior and outcomes of competitive bidding processes — a topic that would become central to Milgrom's subsequent career and to the field of auction theory more broadly. Wilson, who would later share the 2020 Nobel Prize with Milgrom, served as his doctoral advisor and became a lifelong intellectual collaborator.

The pairing of Milgrom and Wilson at Stanford proved consequential for the development of modern auction theory. Wilson's own work on common-value auctions and the "winner's curse" provided a foundation upon which Milgrom built and extended, ultimately transforming the understanding of how auctions function under varying informational conditions.

Career

Early Academic Career

After completing his doctorate in 1979, Milgrom joined the faculty of Northwestern University, where he served from 1979 to 1983. During this period, he began publishing foundational research in game theory and information economics. His time at Northwestern was marked by productive collaboration with other economists working on related problems in strategic behavior and mechanism design.

Milgrom then moved to Yale University, where he was a faculty member from 1982 to 1987. The overlap in dates between his Northwestern and Yale appointments reflects a transitional period common in academic careers. At Yale, Milgrom continued to develop his research program in auction theory, information economics, and organizational economics, establishing himself as one of the leading theorists in these areas.

A notable early contribution was the no-trade theorem, which Milgrom developed jointly with economist Nancy Stokey. The theorem demonstrates that under certain conditions — specifically, when agents have common prior beliefs and trade is motivated purely by differences in information — rational agents cannot find mutually beneficial trades. This result has had significant implications for understanding financial markets and the role of information in trading activity.

Stanford University

In 1987, Milgrom joined Stanford University as the Shirley and Leonard Ely Professor of Humanities and Sciences, a position he has held continuously since that time. At Stanford, he also holds an appointment in the School of Engineering and serves as a Senior Fellow at the Stanford Institute for Economic Policy Research (SIEPR).

At Stanford, Milgrom has been a prolific researcher and mentor. Among his doctoral students are several economists who have gone on to prominent careers, including Susan Athey, Luís Cabral, Joshua Gans, Gillian Hadfield, and Li Shengwu. Susan Athey, in particular, went on to become the first female winner of the John Bates Clark Medal in 2007, further underscoring the influence of Milgrom's mentorship and intellectual lineage.

Milgrom's academic output at Stanford has spanned auction theory, game theory, organizational economics, and market design. His work on monotone comparative statics, developed with Chris Shannon, provided necessary and sufficient conditions on parameterized optimization problems for their solution sets to exhibit monotone behavior — a result that has been applied broadly across economics. His research on assignment exchanges has explored mechanisms for efficient allocation of resources.

Contributions to Auction Theory

Milgrom's contributions to auction theory represent the core of his scholarly impact. His research has addressed fundamental questions about how auctions work, how bidders behave under different informational conditions, and how auction rules can be designed to achieve specific objectives such as revenue maximization or efficient allocation.

A central theme in Milgrom's work is the role of information in auctions. His doctoral dissertation on the structure of information in competitive bidding laid the groundwork for analyzing how private and common information affect bidding strategies and auction outcomes. In the standard framework, bidders may have private values (where each bidder knows their own valuation but not others') or common values (where the item has the same value to all bidders, but each bidder has different information about that value). Milgrom's theoretical contributions clarified how these different informational environments affect the performance of various auction formats, including English auctions, Dutch auctions, first-price sealed-bid auctions, and second-price sealed-bid auctions.

His work with Robert Weber on the theory of auctions with affiliated values was particularly influential. Affiliation is a statistical property describing a positive correlation between bidders' signals and values. Milgrom and Weber demonstrated that when values are affiliated, an English (ascending-price) auction tends to generate higher expected revenue than a first-price sealed-bid auction, which in turn generates higher revenue than a Dutch auction. This ranking result, known as the linkage principle, provided a rigorous theoretical basis for understanding why certain auction formats are preferred in practice.

FCC Spectrum Auctions

Among Milgrom's most consequential practical contributions is his work on the design of spectrum auctions for the U.S. Federal Communications Commission. Together with his doctoral advisor Robert Wilson, Milgrom designed the simultaneous multiple-round auction (SMRA) protocol that the FCC adopted in the 1990s for auctioning radio spectrum licenses to telecommunications companies.

The challenge of spectrum allocation was multifaceted. Radio spectrum is a scarce public resource, and the licenses for its use are complementary — the value of a license in one geographic region may depend on whether the same company holds licenses in adjacent regions. Previous methods of allocating spectrum, including administrative hearings and lotteries, had been criticized as inefficient and prone to favoritism. The auction approach introduced by Milgrom and Wilson allowed market forces to determine the allocation, while the simultaneous multiple-round format addressed the problem of complementarities by allowing bidders to observe price information across all licenses before committing.

The FCC spectrum auctions have been described as one of the most successful applications of economic theory to public policy. They generated tens of billions of dollars in revenue for the U.S. government while allocating spectrum to the companies that valued it most highly — a key precondition for the development of modern wireless telecommunications, including mobile phones and broadband internet.

Broadcast Incentive Auction

Milgrom subsequently led the team that designed the FCC's broadcast incentive auction, conducted between 2016 and 2017. This auction was a novel two-sided mechanism designed to reallocate radio frequencies from television broadcast use to wireless broadband uses. On one side of the auction, television broadcasters were offered incentive payments to voluntarily relinquish their spectrum rights. On the other side, wireless companies bid to acquire the freed-up spectrum. The auction's design required solving a complex repacking problem — determining how to reassign remaining television stations to a reduced set of channels while minimizing interference.

The broadcast incentive auction was the first auction of its kind, combining a reverse auction (buying spectrum from broadcasters) with a forward auction (selling spectrum to wireless providers) in a computationally and economically integrated process. The FCC reported that the auction successfully repurposed 84 MHz of spectrum for mobile broadband, raising approximately $19.8 billion in the forward auction and paying approximately $10.05 billion to broadcasters and other costs, yielding significant net proceeds for the U.S. Treasury.

Auctionomics and Applied Market Design

In addition to his academic work, Milgrom co-founded Auctionomics, a company that provides software and services for commercial auctions and exchanges. The firm applies the principles of auction theory and market design to practical commercial settings, bridging the gap between economic theory and business implementation.

In 2024, Auctionomics received a Technical Emmy Award for its contributions to spectrum auction design, recognizing the firm's role in developing the technology and methodology underlying the broadcast incentive auction and related auction systems.

In 2025, Auctionomics partnered with OneChronos on what was described as the first tradable financial market for GPU compute resources. The partnership aimed to apply market design principles to the emerging market for artificial intelligence computing resources, with the goal of creating efficient, transparent pricing mechanisms for GPU capacity — a resource in high demand due to the growth of AI applications.

Milgrom has also applied his market design expertise to water resource allocation. In 2024, he was reported to be working on new market mechanisms for the Colorado River and similar water systems, applying auction and exchange principles to address the challenges of water scarcity in the American West. This work represents an extension of Milgrom's longstanding interest in designing markets that can efficiently allocate scarce resources while balancing competing interests.

Personal Life

Paul Milgrom is married to Eva Meyersson. The couple resides in the Stanford, California area, in proximity to the university campus.

The announcement of Milgrom's Nobel Prize in October 2020 was accompanied by a now-celebrated anecdote: Milgrom was asleep when the Royal Swedish Academy of Sciences attempted to reach him with the news. It was his co-laureate and neighbor Robert Wilson who knocked on Milgrom's door in the early morning hours to inform him of the award. Stanford Report described the moment, noting that Milgrom "was not prepared for the knock on his door early Monday" morning. The episode, captured on Wilson's doorbell camera, circulated widely on social media and in news coverage, illustrating the personal relationship between the two economists who had been advisor and student, neighbors, and ultimately co-laureates.

In a March 2021 interview with the Nobel Prize organization, Milgrom discussed how his life had changed since the announcement, reflecting on the public attention that accompanied the award and the opportunities it created for communicating economic ideas to broader audiences.

Recognition

Nobel Memorial Prize in Economic Sciences

On October 12, 2020, the Royal Swedish Academy of Sciences announced that Paul Milgrom and Robert B. Wilson had been awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel "for improvements to auction theory and inventions of new auction formats." The Nobel committee cited the pair's theoretical contributions to understanding how auctions work and their practical innovations in designing new auction mechanisms, particularly for the allocation of public resources such as radio spectrum.

The committee noted that Milgrom had developed a more general theory of auctions that encompassed situations where bidders have private information about both their own valuations and other bidders' valuations, and that he had shown how different auction formats could be expected to yield different revenues for the seller. His work on the linkage principle — demonstrating that providing more information to bidders can increase auction revenue — was cited as a particularly influential theoretical result.

Technical Emmy Award

In 2024, Milgrom's firm Auctionomics received a Technical Emmy Award in recognition of its contributions to spectrum auction design. The award acknowledged the technical achievements involved in designing and implementing the broadcast incentive auction, which required innovative approaches to computational optimization, economic mechanism design, and software engineering.

Other Recognition

Milgrom has been recognized by multiple academic and professional organizations over the course of his career. His curriculum vita documents a sustained record of honors, fellowships, and invited lectures at major institutions worldwide. His work has been featured in presentations at leading economics departments, including Northwestern University's Nemmers Prize conference series.

Legacy

Paul Milgrom's influence on economics extends across multiple dimensions: theoretical contributions to auction theory and game theory, practical applications in market design and public policy, mentorship of subsequent generations of economists, and entrepreneurial activity that has translated academic insights into commercial and governmental tools.

His theoretical work on auctions fundamentally altered the field's understanding of how information, competition, and institutional rules interact to determine market outcomes. The concepts of affiliated values, the linkage principle, and the revenue ranking of auction formats have become standard components of graduate economics education and are cited extensively in the academic literature. His contributions to monotone comparative statics and supermodular games have had applications beyond auction theory, influencing the broader study of strategic interaction and optimization.

The practical impact of Milgrom's work is perhaps most visible in the telecommunications sector. The FCC spectrum auctions he helped design have been adopted as a model for spectrum allocation in countries around the world. The transition from administrative allocation to market-based allocation of radio spectrum is considered one of the major regulatory innovations of the late 20th century, and Milgrom's role in designing the auction mechanisms that made this possible is central to that narrative.

His more recent work on water markets and GPU compute markets suggests that Milgrom continues to seek new applications for market design principles in areas where resource scarcity and allocation efficiency present pressing challenges. The breadth of these applications — from telecommunications to broadcasting, from financial markets to natural resource management — underscores the generality of the market design framework that Milgrom has helped develop and refine over four decades.

As a mentor, Milgrom's influence is reflected in the careers of his doctoral students, several of whom have become prominent economists in their own right. Susan Athey, Joshua Gans, Luís Cabral, Gillian Hadfield, and Li Shengwu each developed research programs that build upon or extend the themes present in Milgrom's work, ensuring that his intellectual contributions continue to propagate through the discipline.