Oliver Hart and Bengt Holmstrom, the two British-American economists, on Monday were awarded the Nobel Economic Prize for their work in contract theory. Hart and Holmstrom’s created theoretical tools are important for understanding real-life contracts and institutions as well as the potential pitfalls in contract design.
This theory has made clarity from political constitutions to bankruptcy legislation. This economics prize is the fifth of the six Nobel prizes to be announced this year.Eight million kronor (826,000 euros, $924,000) prize will be shared by the duo.
Holmstrom is a professor of economics and management at Massachusetts Institute of Technology while Hart, born in 1948, is an economics professor at Harvard University in the United States.