Introduction.The large-scale use of auctions today in various fields, while avoiding distortions in the behavior of economic agents is considered by scientists as one of the effective tools to improve public welfare. Research conducted by Nobel Laureates in Economics 2020 Paul Milgrom and Robert Wilson has made it possible to rethink the possibilities of reformatting auctions to ensure the maximum benefit from their holding for all subjects. P. Milgrom and R. Wilson demonstrated how the technically complex«constructions» of economics to build optimal auction designs make it possible to obtain complete material benefits for society.Prupose.To substantiate the specifics of auction theory, the formats of the latter and the contribution to their development of P. Milgrom and R. Wilson - winners of the Nobel Prize in Economics in 2020.Methods. During the preparation of the article general scientific research methods were used: analysis, synthesis, induction, deduction, as well as the method of formalization, which greatly contributed to the possibility of identifying the specifics of auction theory, their formats and substantiation of scientific achievements of Nobel Laureates in Economics P. Milgrom and R. Wilson in the development of theory and practice of auctions.Results. Research by P. Milgrom and R. Wilson, awarded the Nobel Prize «for improvements to auction theory and inventions of new auction formats»), prove that auction theory is an effective tool for regulators and governments of different countries that are interested in finding ways to most effectively use certain assets. Unlike most economic models, which usually require simplification and abstraction, the conclusions of scientists in auction theory can be applied in a specific practical area - from trade in raw materials and securities - to public procurement, tenders, subsoil and radio frequency, online advertising, etc. While previous researchers, including W. Vickrey and R. Myerson, devoted their work to private value auctions (when for each buyer the value of the object is known only to him and does not depend on the opinion of other auction participants), R. Wilson in the late 1960s, focused on the analysis of auctions with common value (when the object is of equal value to all auction participants, but each of them may have its own unique information about it). In particular, at auctions for the right to produce oil in a certain area, its value for all bidders is the same, but information on the field reserves and the specifics of the area may be different. R. Wilson also argued what should be the behavior of a rational bidder to avoid the so-called «winner’s curse» (a situation in which the winner of the object will pre- set an excessively high price, if guided solely by their own assessment of profits). Radio frequency auctions in the United States are the largest and best-known example of the practical application of the findings of R. Wilson and P. Milgrom, which made the previously inefficient and virtually free distribution of licenses a way to win for sellers and buyers and society as a whole.Discussion. Auction theory will continue to develop in the future, taking into account the new challenges posed, in particular, the need to develop tools and mechanisms for conducting virtual auctions in order to adequately adapt to digital reality. The need to develop a «road map» to address the shortcomings inherent in the existing auction formats in terms of taking into account the accelerated development of technology, increasing mobility, globalization and digitalization of the economy.
From auction theory to market design: Paul Milgrom and Robert Wilson’s contributions to Economics
