Co-Founder and Chairman of the Board of Directors
“Paul Milgrom has combined fundamental work in economic theory and, in particular, the theory of auctions, with extensive practical participation in the auctions of the electromagnetic spectrum. This book is a brilliant synthesis of his own and others’ contributions to the field. The impact of practical problems on the need for theory is thoroughly exemplified. The exposition of the theory has that complete ease only achievable through complete mastery and intense work.” Kenneth Arrow, Nobel Laureate, Stanford University.
A decade ago, Milgrom’s expanded his role from that of an academic game theorist when he became the main architect of the Federal Communications Commission’s original US spectrum auction design; it was his “activity rule” that made feasible the implementation of the “simultaneous multiple round” (SMR) auction. Milgrom’s role in creating this design is celebrated in accounts by the National Science Foundation (“America’s Investment in the Future”), which identifies it as one of the main practical contributions of 20th century research in micro-economic theory, and by the prestigious National Academy of Sciences (“Beyond Discovery”). The SMR design has been copied and adapted worldwide for auctions of hundreds of billions of dollars’ worth of radio spectrum, electricity, natural gas, etc.
The next of Milgrom’s major innovations was the “core-selecting package auction,” developed with collaborator Professor Bob Day and incorporated in 2007 into the U.K.’s spectrum auction mechanism. In 2008, the UK further revised their auction rules to include the patent-pending “revealed preference activity rule,” co-invented by Milgrom and his collaborator Professor Lawrence Ausubel.
Most recently, Milgrom has invented the “Milgrom assignment auction,” the proprietary design that makes Auctionomics unique. Like Milgrom’s original SMR mechanism, this design can address especially complex situations involving complementarity, but the Milgrom assignment auction runs instantaneously. Compared to the original SMR auction, which require many hours, days, or weeks, the new design reduces transaction costs and increases precision in setting prices. Most exciting, perhaps, is the design’s potential for entirely new applications. It can be adapted into a non-price bidding mechanism to place students efficiently and fairly into college courses, or to reallocate airline slots in the event of bad weather at a crowed airport.
And Milgrom’s theoretical approach is tempered by wide consulting experience on high- profile auction designs. He has advised regulators in the US, UK, Canada, Australia, Germany, and Mexico, on the implementation and improvement of the original SMR design, and is currently engaged by the US Treasury to advise on auctions of mortgage-backed securities. At Google, Milgrom advised CEO Eric Schmidt and co-founder Sergey Brin on the design of their IPO. At Yahoo!, he advised on the design of markets to sell on-line advertising, and at Microsoft Networks on auctions related to the placement of search advertising.
Milgrom has also had notable success leading teams of consultants to advise bidders in major auctions, including the team that guided Comcast and its consortium SpectrumCo, in US Auction 66, to the most exceptional performance in US-spectrum-auction history. SpectrumCo saved nearly $1.2 billion on its spectrum license purchases based on the prices paid by other large bidders – such as T-Mobile and Verizon – for comparable spectrum acquired at the same time in the same auction. SpectrumCo’s tactics included a $750 million jump-bid – the largest in the history of US spectrum auctions and a move that prompted the FCC to change the auction rules. His unorthodox strategy will be described in more detail in the forthcoming article “Winning Play in a Spectrum Auction.”
Milgrom is an adviser to BlueKai, a marketplace for Internet ad-targeting data, OpenX, an Internet advertising exchange, Samasource, a nonprofit social enterprise whose mission to connect women, youth and refugees living in poverty to dignified, computer-based work, Calera, a green cement manufacturer, and Rackup.com, which auctions gift cards to consumers.