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The road to world-changing research: Face to face with Nobel Laureate in Economics

MAY . 03 2021
Peking University, May 3, 2021: On April 22, the Guanghua School of Management at Peking University, in collaboration with Stanford Center at Peking University, hosted a conversation between the 2020 Nobel Laureate Robert B. Wilson and Guanghua Dean Liu Qiao. The event, titled “The Road to World-changing Research” was streamed live on two bilingual platforms and engaged over 1200 participants from 20 countries. The eager audience consisted of faculty, students, and alumni of Peking University and Stanford University.

At the event, Professor Wilson shared his personal experience as a scholar, a consultant, and an educator. He emphasized the importance of integrating theoretical and empirical research in addressing real-world problems.

Sources for original research

The conversation started off with Professor Wilson recounting his early career and motivations for his research focus. Having always been perplexed by the practical aspects of economic theory, Professor Wilson turned down a job offer after graduating with an MBA and joined the doctoral program. He remembers this education experience as “very stimulating” and attributed his strong interest in game theory to his mentor, Howard Raiffa (co-author with R. Duncan Luce of Games and Decisions). In fact, Professor Wilson finds his close affiliation with the business school to be more stimulating than if he had confined himself to the economics department. He believes that the latter has a tendency to be wedded to a canonical view of how the economy works, whereas the former presents problems in a concrete and practical way that encourages original research. “You cannot develop some research and then put it to work”, he argues, “the theory needs to be developed as an explanation of the feature you observe in the practical situation.” It is from these concrete problems that Professor Wilson derives his ideas for research. On this point, Dean Liu agrees that problems are the best source for new theory.

The “Consultant” story behind the Nobel-winning auction format

Professor Wilson won the Nobel Prize in Economics jointly with his doctoral student, Professor Paul Milgrom, for their contributions to the theory of auctions and for the invention of new auction formats for goods and services that could not be efficiently sold in more traditional types of auction. During the conversation, Professor Wilson also elaborated on his involvement in the spectrum auction of FCC (Federal Communication Commission) in 1993 and the design process of the simultaneously ascending auction model. He explained that their main ideas for the design came from previous work, which established that dynamic auctions (conducted overtime and in successive stages) elicits more information from the bidders and reduces the risk of “the winner’s curse.” By having a simultaneous ascending auction, the design enabled telephone companies to pick a portfolio of licenses that would best serve their needs. The format improves efficiency by making people who were choosing among the licenses price-takers. He recalled, “the design at the time seemed very natural and had the desired effect.”

Dean Liu supports this approach of combining theory with practice in solving real-world problems, such as carbon neutrality. In the case of carbon reduction, Professor Wilson suggests that research could be helpful in finding out the optimal quantity of carbon emission before implementing a cap-and-trade system.

An accomplished and encouraging educator

As an active educator for over 50 years at Stanford University, Professor Wilson always makes his courses “current” and keeps pace with his ongoing projects. Being the mentor of three Nobel Prize winners (Alvin Roth, Bengt Holmstrom, and Paul Milgrom), Professor Wilson always encourages his students to follow their own ideas and provides them with the necessary skills and criticism to get further in pursuing their interests. He cautions young faculty members of business schools against being locked into the paradigm. “The absolute truth taught in the PhD department is just an intellectual construction,” he argues, “researchers should seek to challenge the paradigm and figure out how it works in the real-world with real people.” He stresses that each of the trinity—experimental work, theoretical work, and empirical work—supports one another. Professor Wilson also expresses great faith in Chinese researchers, “It shouldn’t be long before China will have one of its own Nobel Laureates in Economics.”

The future of business school research

Finally, Professor Wilson addresses one of the biggest challenges faced by business schools: the balance between theoretical research and practical work. He views the advancement of knowledge as an accumulation of little findings that culminates in big breakthroughs. To achieve such breakthroughs, he emphasizes the importance of both mundane involvement in practical issues and rigorous engagement in higher theory. Professor Wilson proposes that young faculty members could think of consulting experiences as a search for research topics and use this as a standard when selecting projects.

Dean Liu Qiao (top left), Profess Robert B. Wilson (top right), Professor Weng Xi (below)

The Guanghua School of Management is widely recognized as the premier business school in China with multiple programs that routinely rank among the best in Asia. Guanghua's preeminent faculty and students have played key roles in China's economic development, putting Guanghua in a unique position to bring the world to China and China to the world.

The Guanghua School of Management's "The Thought Leader Series" hosts renowned thought leaders from business, government, and nonprofit organizations to share their unique insights on business, society, China, and the world. This series aims to provide a platform in which faculty, students, alumni, and Guanghua friends and company partners can learn, exchange ideas, and drive positive change in their communities.

Edited by: Huang Weijian
Guanghua School of Management, Peking University