William Vickrey

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William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian professor of economics and Nobel Laureate. Vickrey was awarded the Nobel Memorial Prize in Economics with James Mirrlees for their research into the economic theory of incentives under asymmetric information. The announcement of the prize was made just three days prior to his death; his Columbia University economics department colleague C. Lowell Harriss accepted the prize on his posthumous behalf.

Contents

Biography

Early years

Vickrey was born in Victoria, British Columbia and attended high school at Phillips Academy in Andover, Massachusetts. After obtaining his B.S. in mathematics at Yale University in 1935, he went on to complete his masters in 1937 and doctoral studies in 1948 at Columbia University where he would remain for most of his career.

Career

Vickrey's paper, Counterspeculation, auctions and competitive sealed tenders, was the first of its kind using the tools of game theory to explain the dynamics of auctions. In his paper, Vickrey derives several auction equilibria, and provides an early revenue equivalence result. The revenue equivalence theorem remains the centrepiece of modern auction theory. The Vickrey auction is named after him.

He also did important work in congestion pricing, the idea that roads and other services should be priced so that users see the costs that arise from the service being fully used when there is still demand. Congestion pricing gives a signal to users to adjust their behaviour or to investors to expand the service in order to remove the constraint. His theory was later partially put into action in London.

In public economics, Vickrey extended the marginal cost pricing approach of Harold Hotelling.

Vickrey's economic philosophy was influenced by John Maynard Keynes and sharply critical of Chicago school of economics and the political focus on balanced budgets and inflation in times of high unemployment.

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