British-American economist Oliver Hart
and Bengt Holmstrom of Finland on Monday won the Nobel Economics Prize
for their work on contract theory, the jury said.
“This year’s laureates have developed
contract theory, a comprehensive framework for analysing many diverse
issues in contractual design, like performance-based pay for top
executives, deductibles and co-pays in insurance, and the privatisation
of public-sector activities,” it said.
“The new theoretical tools created by
Hart and Holmstrom are valuable to the understanding of real-life
contracts and institutions, as well as potential pitfalls in contract
design.”
Their groundbreaking work has laid “an
intellectual foundation” for designing policies and institutions in many
areas, from bankruptcy legislation to political constitutions.
Hart, born in 1948, is an economics
professor at Harvard University in the United States, while Holmstrom is
a professor of economics and management at Massachusetts Institute of
Technology.
The pair will share the eight million kronor (826,000 euros, $924,000) prize.
Last year, the award went to US-British researcher Angus Deaton for his groundbreaking work on poverty.
The economics prize is unique among the
Nobel awards in that it was created by the Swedish central bank in 1968 —
the others were all set up through the 1895 will of Swedish inventor
and philanthropist Alfred Nobel.
The economics prize is the fifth of the six Nobel prizes to be announced this year.
Last week, the awards for medicine,
physics, and chemistry were announced, as well as the peace prize, which
went to Colombia’s President Juan Manuel Santos for his efforts to end a
half-century war with the FARC rebels.
The final prize, for literature, will be announced Thursday.
For that award, the Swedish Academy
could tap a superstar novelist such as Philip Roth of the United States
or Haruki Murakami of Japan, or a lesser-known writer such as Norwegian
playwright Jon Fosse or Syrian poet Adonis.
The Nobel prize consists of a diploma, a
gold medal and cheque for eight million Swedish kronor (828,000 euros,
$928,000), which the laureates will receive at a ceremony in Stockholm
on December 10.
AFP
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