The Prize in Economic Sciences 2020
nobelprize.org
nobelprize.org
Milgrom's Putting Auction Theory to Work [2] is an excellent introduction to this world.
PS: OneChronos (YC 16) [3] is working on bringing these mechanisms to capital markets. It's an incredibly challenging but rewarding problem that spans deeply theoretical and applied problems. We're always hiring top academic and engineering talent regardless of your background.
[1] https://www.goldengooseaward.org/01awardees/auction-design
[2] https://www.google.com/books/edition/Putting_Auction_Theory_...
Milgrom and Wilson is... expected. I mean, auction theory has been very influential, but I think Roth + Shapley (2012) just recently covered more fun intellectual predecessor and successor movements to much of Milgrom and Wilson. Classic theory-heavy work that has had practical influence as well. Arguably, their emphasis on supermodularity was a deep theoretical influence on follow-on work, so I have to count that as high impact. But it does feel a little less exciting than past awardees. Maybe just because we've lived with auction theory for so long now?
There’s a footnote in Heckman’s that pretty much renders Duflo’s work invalid.
You might be thinking of David Romer's textbook. As far as I know, Paul Romer never wrote one.
Paul Romer had tons of mainstream cred from his two classic publications. He left the profession and really didn't have anything to do with it for many years, even becoming a startup founder. Then he showed up to coin the term mathiness while criticizing his advisor, and later wrote a critique of modern macro.
[1] http://www.cramton.umd.edu/aa/cramton-gall-sujarittanonta-wi...
> Paul Milgrom formulated a more general theory of auctions that not only allows common values, but also private values that vary from bidder to bidder. He analysed the bidding strategies in a number of well-known auction formats, demonstrating that a format will give the seller higher expected revenue when bidders learn more about each other’s estimated values during bidding.
It should be noted that the auction format Milgrom created for the first FCC auction, the SMR auction, is no longer the preferred auction format for spectrum auction. The preferred format has shifted to a general clock auction (round-by-round for generic blocks) with a supplement round where the actual blocks are assigned in a Vickrey algorithm. Additionally, as computing power has increased, the "combinatorial" format has become popular in many countries (Canada, UK) where bidders can submit different package bids which are all taken into account with the winner determined by a SAT solver.
Is anyone doing this for elections?
The best thing, there is a doorbell video of that happening: https://twitter.com/Stanford/status/1315631500080148480
To answer your question about valuing a used Tesla - a regression formula would work best, take the variables like mileage, features, color, etc. and find 30-40 used Tesla sales to create your formula.
What's next. The nobel committee is going to rename the literature prize to literature "sciences" because the literature prize has lost any credibility or value?
Why not just say economics? Why try to sneakily and falsely latch onto the sciences. It may work for the short term but in the long term it really detracts from the field as it tries to pretend to be what it is not. There is value in economics, but not in the sciences.
Arguably a science should feature theories with some ability to predict behaviour observed in the world, and those theories should be falsifiable.
Some offshoots of theoretical physics that generate large parameter spaces of non-testable mathematical models packed with complex equations are arguably not science (string theories...)
of course the assumptions of the theory are never perfectly met in the real world, and things can get quite messy. but for instance, the theory predicts that certain kinds of auctions should fail quite badly, which has happened; and it gives prescriptions for better types of auctions, which have resulted in more revenue.
There was nothing falsifiable about Newton or Darwin. They were predictive (Darwin to a lesser extent) and, more importantly, they fit, like a puzzle.
Falsifiability is a good rule of thumb, like Occam's razor, to tell apart obviously pathological research (this possibly includes particle and high-energy physics); but the point of science is the unity of science. If you're a believer in science, you have to believe there's true knowledge to be had (however unobtainable); this true knowledge has to be a single thing, a single puzzle to piece together.
However inefficiently and plagued by politics, economics is doing a bit of that. Not long ago we were thinking that it should be replaced in favor of psychology, which is closer to the matter of human behavior. But just look at how psychology is doing.
I think it's dangerous to take their ideas too seriously.
See also 1929, 2008, etc etc.
The value of stock options hews very close to what Black-Scholes theory would assume. There's one loose bone: volatility. But reasonable estimates of volatility are close enough for any real applications of derivatives (i.e. hedging, not speculation).
The uncovered parity equation of exchange rates has one loose bone: sovereign risk premia. If Cristina Kirschner dies and her successor starts privatizing foreign-owned capital assets, well, there goes the model. And to a smaller extent this is happening all the time. But if you had to take a decision on how local interest rates affect exchange rates, this is an excellent guide.
If anything, economics is insufficiently mathematical in the treatment of what it can't determine. It's a reasonable mean field theory but should be more Bayesian about what it takes as assumption (markets will open tomorrow -- fruit and stock alike...). The assumptions are mostly fine but we should, as a general public, have a clearer picture of how fine.
Then, how well is epidemiology doing this? 99% confidence intervals from March Covid models should encompass the possibility that there's almost no fomite transmission but the virus remains alive in airborne aerosols for longer distances and time. We might all have gone the Swede route, where true agglomerations were instantly shut down, or at least prevented having the WHO and the Surgeon General telling us not to wear masks.
It absolutely is not. It's is a societal study based on artificial rules created by man. It's no more a "science" than a study of monopoly or minecraft. After all, the laws/rules of monpoly or minecraft can be changed since they are man-made and not natural.
> there are complex equations beyond most of our understanding behind the theory, just like you’d find in physics or chemistry.
Except that in physics or chemistry, the complex equations are testable in nature and hence reproducible and testable. Nothing in economics is objectively testable. The better comparison would be to astrology or christian numeralology. Where people make arbitrary rules and within those rules they use "numbers" to create associations.
"The Sveriges Riksbank prize in Economic Sciences in memory of Alfred Nobel"
which tells you all you need to know about it.