Oliver Hart and Bengt Holmstrom Awarded With The 2016 Nobel Prize in Economic Science.

2016 Nobel Memorial Prize in Economic Science was awarded to Oliver Hart of Harvard University and Bengt Holmstrom of Massachusetts Institute of Technology on Monday, for their work in Contract Theory.

Royal Swedish Academy of Sciences said that the awardees have developed a contract theory which is a comprehensive framework for analysing diverse issues in contractual design. For example performance-based pay for top executives and the privatisation of public-sector activities.

The academy also added that their analytical work has established an “intellectual foundation” to understand  everyday contracts in areas such as bankruptcy legislation and political constitutions.

They also said that the theories invented by both of them were valuable in understanding real life contracts and institutions and potential pitfalls in contract design as well.

Oliver Hart was born in London and studied at University College London, Cambridge University and Warwick University and received his PhD from Princeton. He has been teaching economics at Harvard University since 1993. The Academy stated that his research has helped in understanding about which company should go into a merger and institutes such as schools should be public or private.

Bengt Holmstrom, who was born in Helsinki, Finland is a PhD holder from Stanford University and is serving as a professor of Economics at MIT since 1994. His work has helped in formulating contracts for executives in corporates.

They will share the prize money of $9,28,000 among themselves and will be awarded with a medal and diploma on 10th December on the occasion of Alfred Nobel’s death Anniversary.

Now only the Nobel Prize in Literature is left and the award will be announced on 13th October.

10 October
Rohan Jaitly