Robert Wilson, Distinguished Fellow 2006
The range of Robert Wilson’s research contributions is remarkable. Several of his ideas, both in economic theory and in applications such as electricity markets and auctions, have had a durable impact on economics.
Probably the most well known of Wilson’s contributions are those on nonlinear pricing, sequential equilibrium, and auctions. His work on nonlinear pricing was summarized in a 1993 book that has become a standard reference, and won many awards. The applications addressed there include service differentiation via priorities and related schemes for efficient rationing when markets are incomplete.
Sequential equilibrium is a definition aimed at getting around the problem of multiple equilibria in games. Games can have multiple equilibria when beliefs and actions are self-reinforcing. The definition proposed by Kreps and Wilson led to a wide range of applications in economics. In studies of industrial organization, its application to reputation effects in repeated interactions enabled better modeling of price wars and other strategies used by firms to deter entrants. Wilson has also provided widely used algorithms for computing equilibria of economies and games.
Wilson's early theoretical work on auctions identified the role of adverse selection (now called the "winner's curse") that occurs when bidders' valuations are correlated. With Paul Milgrom and Preston McAfee, he contributed to the design of the FCC's spectrum auctions, which anticipated some of the subsequent development of electronic commerce. In recent years he has contributed to the design of markets for electric power.
Supplementing these three famous strands of Wilson’s research are many others, such as a study with Gul and Sonnenschein about the Coase conjecture, an article on informational economies of scale, and a model of the core of an economy with asymmetric information. His early work on efficient schemes for sharing risk became a basis for applications in finance and accounting. His work on social choice showed that the Pareto principle is not needed to obtain Arrow's main conclusions. There is no question that Robert Wilson is a worthy Distinguished Fellow of the Association.