On Wednesday, Paul Milgrom will become the first Nobel economics laureate to win an Emmy, in a sign of just how omnipresent his field of auction design has become.

Why it matters: Milgrom's company, Auctionomics, has quietly come to dominate the industry of market design, which encompasses auction design and which co-founder Silvia Console Battilana describes as "a little secret you have never heard of that influences your everyday life."

The big picture: "Market design is everywhere," she says. It drives the matching algorithms in dating apps, for instance, and determines the trade-off between how long you wait to learn how far away your Uber is, versus how long you have to wait for it to arrive. (In general, the longer the initial period of uncertainty, the lower the overall time spent between calling the car and its arrival.)

• Good auction design can save lives, by, for instance, reducing the wait for a kidney from 695 days to 440 days. It can even prevent wars if it's successfully applied to water rights.

Driving the news: Auctionomics is sharing its Emmy with the FCC, "for the creativity and engineering design of the FCC's Broadcast Incentive Auction" — an event that enabled smartphone streaming to become ubiquitous.

• The auction, which took place in 2016, was hugely complex, but the underlying idea was simple: Instead of the government taking spectrum by eminent domain and risking years of lawsuits, it ran a so-called incentive auction, where the spectrum owners had a financial incentive to sell their spectrum rights.
• Those owners were some 50 different broadcasters, running more than 1,000 local TV stations that were occupying a part of the electromagnetic spectrum that would be much more valuable in the hands of wireless carriers. They ended up selling their spectrum for $10 billion. Meanwhile, the wireless carriers bought the spectrum for $19 billion, leaving more than $7 billion for the U.S. Treasury.
• As a result, not only did the TV industry find itself flush with billions of unexpected dollars, the wireless industry was also able for the first time to stream video to millions of cellphones simultaneously. Both developments were a clear boon for Hollywood, hence the Emmy.

Zoom out: Auctionomics was founded in 2008, during the financial crisis, in order to come up with a way of pricing and selling the toxic assets on banks' balance sheets.

• It soon started advising bidders in spectrum auctions around the world, naturally enough since Milgrom invented the simultaneous multiple-round auction format that the FCC began using for spectrum auctions in 1994.
• Auctionomics then helped develop auctions for assets like rough diamonds, New Zealand milk powder, Chilean fishing rights, and slot-machine gaming rights in Australia.
• It's now advising Google in the tech giant's antitrust lawsuit. Nearly all of Google's $328 billion in annual revenue is generated in auctions, so market design — and the possible abuse thereof — is at the heart of the company's business.

Zoom in: When you pay for wireless internet or see an ad online or eat fish or catch an Uber or even just drink water, you're participating in an economy whose deep structure was designed by a surprisingly small number of economists.

The bottom line: When people gesture vaguely at something they call "the algorithm," often what they're really referring to is a two- or three-sided market with very carefully designed rules and parameters.

• The people who design those rules therefore have astonishing power in terms of shaping our world.

"The game is always bigger than you think," says Milgrom — which means that the companies and governments designing auctions need to be hyper-aware of how they can be gamed.

Why it matters: A small quirk of auction design can be worth billions of dollars to a company that successfully identifies and exploits it.

Between the lines: A significant chunk of Auctionomics' business is either advising companies on how to (legally) game existing auctions; doing an ex-post analysis of an auction to determine whether there was nefarious activity; or advising governments on how to design auctions so they can't be gamed — for instance by banning non-strategic bidders who might want to try to corner the market in an asset and then sell it off themselves.

• Governments generally want to avoid the possibility that rival bidders will collude to divvy up assets without bidding against each other. To that end, they generally strictly prohibit any kind of communication between companies.
• In multiple-round auctions, however, bids are generally made public after each round — which means that companies can sometimes legally send signals in things like the final digits of their bid, or the exact timestamp at which the bid is received.

The big picture: When the stakes are in the billions, there's no such thing as taking too many precautions.

• Auctionomics has two different teams in two different countries writing and running its software, for instance. The idea is that if they don't produce the same result, one of them must have made a mistake.
• Secrecy and confidentiality are paramount: Console Battilana talks of working with Vodafone in Europe, leaving all electronic devices behind, and entering an air-gapped secure room that's swept for bugs every day, protected by a pair of doors that can only be opened with a fingerprint.

Zoom in: "If I'm your competitor and I get to know either your valuation or your budget, then I can wipe you out," explains Console Battilana. "So those two in particular are very secret."

• For that reason, Auctionomics tends only to hire people with direct personal connections to its existing staffers — research assistants, co-authors, and the like. "It's such high stakes that trust is incredibly important," says Console Battilana.

The bottom line: There are lots of conspiracy theories around the art auction houses, and whether certain bidders might have privileges others don't have. Art auctions are minuscule, however, in comparison to the auctions that really drive our world.