William Spencer Vickrey (21 June 1914 – 11 October 1996) was a Canadian-American professor of economics and Nobel Laureate. Vickrey was awarded the 1996

Nobel Memorial Prize in Economic Sciences The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...

with

James Mirrlees Sir James Alexander Mirrlees (5 July 1936 – 29 August 2018) was a British economist and winner of the 1996 Nobel Memorial Prize in Economic Sciences. He was knighted in the 1997 Birthday Honours. Early life and education Born in Minnigaf ...

for their research into the economic theory of

incentives In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...

under asymmetric information, becoming the only Nobel laureate born in

British Columbia British Columbia (commonly abbreviated as BC) is the westernmost province of Canada, situated between the Pacific Ocean and the Rocky Mountains. It has a diverse geography, with rugged landscapes that include rocky coastlines, sandy beaches, ...

. The announcement of his Nobel Prize was made just three days prior to his death. Vickrey died while traveling to a conference of Georgist academics that he helped found and never missed once in 20 years. His

Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...

economics department colleague C. Lowell Harriss accepted the posthumous prize on his behalf. There are only three other cases where a Nobel Prize has been presented posthumously.

Early years

Vickrey was born in

Victoria, British Columbia Victoria is the capital city of the Canadian province of British Columbia, on the southern tip of Vancouver Island off Canada's Pacific coast. The city has a population of 91,867, and the Greater Victoria area has a population of 397,237. The ...

and attended high school at

Phillips Academy ("Not for Self") la, Finis Origine Pendet ("The End Depends Upon the Beginning") Youth From Every Quarter Knowledge and Goodness , address = 180 Main Street , city = Andover , state = Ma ...

Andover, Massachusetts Andover is a town in Essex County, Massachusetts, United States. It was settled in 1642 and incorporated in 1646."Andover" in ''The New Encyclopædia Britannica''. Chicago: Encyclopædia Britannica Inc., 15th ed., 1992, Vol. 1, p. 387. As of th ...

. After obtaining his

B.S. A Bachelor of Science (BS, BSc, SB, or ScB; from the Latin ') is a bachelor's degree awarded for programs that generally last three to five years. The first university to admit a student to the degree of Bachelor of Science was the University ...

in Mathematics at

Yale University Yale University is a private research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the wo ...

in 1935, he went on to complete his M.A. in 1937 and PhD in 1948 at

, where he remained for most of his career.

Career

Vickrey was the first to use the tools of

game theory Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has appli ...

to explain the dynamics of auctions.Vickrey, 1961 In his seminal paper, Vickrey derived several auction equilibria, and provided an early revenue-equivalence result. The

revenue equivalence theorem Revenue equivalence is a concept in auction theory that states that given certain conditions, any mechanism that results in the same outcomes (i.e. allocates items to the same bidders) also has the same expected revenue. Notation There is a set ...

remains the centrepiece of modern auction theory. The

Vickrey auction A Vickrey auction or sealed-bid second-price auction (SBSPA) is a type of sealed-bid auction. Bidders submit written bids without knowing the bid of the other people in the auction. The highest bidder wins but the price paid is the second-highest ...

is named after him. Vickrey worked on

congestion pricing Congestion pricing or congestion charges is a system of surcharging users of public goods that are subject to congestion through excess demand, such as through higher peak charges for use of bus services, electricity, metros, railways, tele ...

, the notion 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 behavior or to investors to expand the service in order to remove the constraint. The theory was later partially put into action in London. In

public economics Public economics ''(or economics of the public sector)'' is the study of government policy through the lens of economic efficiency and equity. Public economics builds on the theory of welfare economics and is ultimately used as a tool to improve ...

, Vickrey extended the Georgist

marginal cost pricing In economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it r ...

approach of Harold Hotelling and showed how public goods should be provided at marginal cost and capital investment outlays financed with

land value tax A land value tax (LVT) is a levy on the value of land (economics), land without regard to buildings, personal property and other land improvement, improvements. It is also known as a location value tax, a point valuation tax, a site valuation ta ...

. Vickrey wrote that replacing taxes on production and labor ("including property taxes on improvements") with fees for holding valuable land sites "would substantially improve the economic efficiency of the jurisdiction". Vickrey further argued that land value tax had no adverse effects and that replacing existing taxes in this way would increase local productivity enough that land prices would rise instead of fall. He also made an ethical argument for Georgist

value capture Value capture is a type of public financing that recovers some or all of the value that public infrastructure generates for private landowners. In many countries, the public sector is responsible for the infrastructure required to support urban dev ...

, noting that owners of valuable locations still take (exclude others from) local public goods, even if they choose not to use them, so without land value tax, land users have to pay twice for those public services (once in tax to government and once in rent to holders of land title). Vickrey's

economic An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...

philosophy was influenced by

John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...

and

Henry George Henry George (September 2, 1839 – October 29, 1897) was an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the eco ...

. He was sharply critical of the Chicago school of economics and was vocal in opposing the political focus on achieving

balanced budgets A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no budget ...

and fighting

inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...

, especially in times of high

unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...

. Working under

General MacArthur Douglas MacArthur (26 January 18805 April 1964) was an American military leader who served as General of the Army for the United States, as well as a field marshal to the Philippine Army. He had served with distinction in World War I, was C ...

, Vickrey helped accomplish radical land reform in Japan. Vickrey had many graduate students and protegés at Columbia University, including the economists

Jacques Drèze Jacques H. Drèze (5 August 1929 – 25 September 2022) was 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 P ...

Harvey J. Levin Harvey Joshua Levin (July 1, 1924 – April 30, 1992) was an American economist. He was university research professor in the Department of Economics at Hofstra University (1989–92), Augustus B. Weller Professor of Economics at Hofstra (1964– ...

, and Lynn Turgeon.

Personal life

Vickrey married Cecile Thompson in 1951. He was a

Quaker Quakers are people who belong to a historically Protestant Christian set of Christian denomination, denominations known formally as the Religious Society of Friends. Members of these movements ("theFriends") are generally united by a belie ...

and a member of Scarsdale

Friends Meeting A Friends meeting house is a meeting house of the Religious Society of Friends (Quakers), where meeting for worship is usually held. Typically, Friends meeting houses are simple and resemble local residential buildings. Steeples, spires, and ...

. He died in Harrison, New York in 1996 from heart failure.

Selected works

*
Counterspeculation, Auctions, and Competitive Sealed Tenders
, ''

Journal of Finance ''The Journal of Finance'' is a peer-reviewed academic journal published by Wiley-Blackwell on behalf of the American Finance Association. It was established in 1946 and is considered to be one of the premier finance journals. The editor-in-chief ...

'', 1961. The paper originated

auction theory Auction theory is an applied branch of economics which deals with how bidders act in auction markets and researches how the features of auction markets incentivise predictable outcomes. Auction theory is a tool used to inform the design of real-w ...

, a subfield of

. * * * *

References

External links

*
IDEAS/RePEc
* *
Jacques H. Dreze, "William S. Vickrey", Biographical Memoirs of the National Academy of Sciences (1998)
{{DEFAULTSORT:Vickrey, William 1914 births 1996 deaths Economists from New York (state) Georgist economists American Quakers American Protestants Canadian economists Canadian emigrants to the United States Nobel laureates in Economics Columbia University faculty Columbia University alumni Yale College alumni People from Victoria, British Columbia Canadian Nobel laureates Posthumous Nobel laureates People from Hastings-on-Hudson, New York 20th-century American economists 20th-century Quakers Fellows of the Econometric Society Presidents of the American Economic Association Distinguished Fellows of the American Economic Association Members of the United States National Academy of Sciences