The Royal Swedish Academy of Sciences has awarded the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel 2016 to Oliver Hart of Harvard and Bengt Holmstrom of Massachusetts Institute of Technology for their contributions to contract theory.
Through their initial contributions, Hart and Holmstrom launched the contract theory as a fertile field of basic research.
Over the last few decades, they have also explored many of its applications. Their analysis
of optimal contractual arrangements lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions.
Oliver Hart was born in London but he spent his academic career in America and is currently the Andrew E Furer Professor of Economics at Harvard University.
Bengt Holmstrom was born in Helsinki, Finland, and is a professor of Economics and Management at Massachusetts Institute of Technology, Cambridge, USA.
The winners will split an eight million Swedish kronor (USD 924,000) award funded by the Swedish central bank.