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William Vickreywas a Canadian-born American economist who brought innovative analysis to the problems of incomplete, or asymmetrical, information. He shared the 1996 Nobel Prize for Economics with British economist James A. Mirrlees.
Vickreyâs family moved from Canada to New York when he was three months old. He was educated at Yale University (B.S., 1935) and Columbia University (M.A., 1937; Ph.D., 1947), where he taught throughout his career. A Quaker, he was a conscientious objector during World War II and spent those years performing public service and developing an inheritance tax for Puerto Rico.
Vickrey had a keen interest in human welfare, often choosing projects with practical applications. His studies of traffic congestion concluded that pricing on commuter trains and toll roads should vary according to usage, with higher fees levied during peak-use periods. This congestion pricing was later adopted by electric and telephone utilities and airlines. In his doctoral thesis, published as Agenda for Progressive Taxation (1947), he advocated an âoptimal income taxâ that would be based on long-term earnings rather than on yearly income.
In awarding him the 1996 Nobel Prize, the selection committee specifically cited his novel approach to auctioneering (now known as a âVickrey auctionâ), which, through sealed bidding, awards the auctioned item to the highest bidder but at the price submitted by the second highest bidder. This method, said Vickrey, benefits both buyer and seller by guaranteeing bids that reflect the fair value of the item. Vickrey did not live to receive the Nobel Prize. In the flurry of activity that followed the Nobel announcement, he died of a heart attack just three days after being named.
