William Vickrey
Encyclopedia
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.
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.
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 Henry George
. He was sharply critical of the Chicago school of economics and the political focus on achieving balanced budgets and fighting inflation
in times of high unemployment
.
Vickrey had many graduate students and proteges at Columbia University, including the economists Jacques Drèze
, Lynn Turgeon, and Harvey J. Levin
.
in 1996 from heart failure. He was a Quaker and a member of Scarsdale
Friends Meeting.
James Mirrlees
Sir James Alexander Mirrlees is a Scottish economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in 1998....
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
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
economics department colleague C. Lowell Harriss accepted the prize on his posthumous behalf.
Early years
Vickrey was born in Victoria, British ColumbiaVictoria, British Columbia
Victoria is the capital city of British Columbia, Canada and is located on the southern tip of Vancouver Island off Canada's Pacific coast. The city has a population of about 78,000 within the metropolitan area of Greater Victoria, which has a population of 360,063, the 15th most populous Canadian...
and attended high school at Phillips Academy
Phillips Academy
Phillips Academy is a selective, co-educational independent boarding high school for boarding and day students in grades 9–12, along with a post-graduate year...
in Andover, Massachusetts
Andover, Massachusetts
Andover is a town in Essex County, Massachusetts, United States. It was incorporated in 1646 and as of the 2010 census, the population was 33,201...
. After obtaining his B.S. in mathematics at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
in 1935, he went on to complete his masters in 1937 and doctoral studies in 1948 at Columbia University
Columbia University
Columbia University in the City of New York is a private, Ivy League university in Manhattan, New York City. Columbia is the oldest institution of higher learning in the state of New York, the fifth oldest in the United States, and one of the country's nine Colonial Colleges founded before the...
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 theoryGame theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
to explain the dynamics of auctions
Auction theory
Auction theory is an applied branch of economics which deals with how people act in auction markets and researches the properties of auction markets. There are many possible designs for an auction and typical issues studied by auction theorists include the efficiency of a given auction design,...
. 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
Vickrey auction
A Vickrey auction is a type of sealed-bid auction, where bidders submit written bids without knowing the bid of the other people in the auction, and in which the highest bidder wins, but the price paid is the second-highest bid. The auction was created by William Vickrey...
is named after him.
He also did important work in congestion pricing
Congestion pricing
Congestion pricing or congestion charges is a system of surcharging users of a transport network in periods of peak demand to reduce traffic congestion. Examples include some toll-like road pricing fees, and higher peak charges for utilities, public transport and slots in canals and airports...
, 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
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
.
In public economics, Vickrey extended the marginal cost pricing approach of Harold Hotelling
Harold Hotelling
Harold Hotelling was a mathematical statistician and an influential economic theorist.He was Associate Professor of Mathematics at Stanford University from 1927 until 1931, a member of the faculty of Columbia University from 1931 until 1946, and a Professor of Mathematical Statistics at the...
.
Vickrey's economic philosophy was influenced by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
and Henry George
Henry George
Henry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
. He was sharply critical of the Chicago school of economics and the political focus on achieving balanced budgets and fighting inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in times of high unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
.
Vickrey had many graduate students and proteges at Columbia University, including the economists Jacques Drèze
Jacques Drèze
Jacques H. Drèze is a Belgian economist noted for his contributions to economic theory, econometrics, and economic policy as well as for his leadership in the economics profession. Drèze was the first President of the European Economic Association in 1986 and was the President of the Econometric...
, Lynn Turgeon, and Harvey J. Levin
Harvey J. Levin
Harvey Joshua Levin was an American economist. He was University Research Professor in the Department of Economics at Hofstra University , Augustus B. Weller Professor of Economics at Hofstra , and Founder and Director of its Public Policy Workshop . He was also a Senior Research Associate at the...
.
Personal life
Vickrey was married to Cecile Thompson in 1951. He died in Harrison, New YorkHarrison, New York
Harrison is a village and town in Westchester County, New York, United States, located approximately northeast of Manhattan. The population was 27,472 at the 2010 census.-Establishment:...
in 1996 from heart failure. He was a Quaker and a member of Scarsdale
Scarsdale
Scarsdale could be*Scarsdale, New York, a village and town in Westchester County, New York, United States, for which The Complete Scarsdale Medical Diet is named...
Friends Meeting.
See also
- Vickrey auctionVickrey auctionA Vickrey auction is a type of sealed-bid auction, where bidders submit written bids without knowing the bid of the other people in the auction, and in which the highest bidder wins, but the price paid is the second-highest bid. The auction was created by William Vickrey...
- Road pricingRoad pricingRoad pricing is an economic concept regarding the various direct charges applied for the use of roads. The road charges includes fuel taxes, licence fees, parking taxes, tolls, and congestion charges, including those which may vary by time of day, by the specific road, or by the specific vehicle...
- London congestion chargeLondon congestion chargeThe London congestion charge is a fee charged for some categories of motor vehicle to travel at certain times within the Congestion Charge Zone , a traffic area in London. The charge aims to reduce congestion, and raise investment funds for London's transport system...
- Electricity marketElectricity marketIn economic terms, electricity is a commodity capable of being bought, sold and traded. An electricity market is a system for effecting purchases, through bids to buy; sales, through offers to sell; and short-term trades, generally in the form of financial or obligation swaps. Bids and offers use...
- List of economists
- List of think tanks
- GeorgismGeorgismGeorgism is an economic philosophy and ideology that holds that people own what they create, but that things found in nature, most importantly land, belong equally to all...