Two get Nobel economics prize

STOCKHOLM: Nobel Prize for economics has been awarded to British-born Oliver Hart and Bengt Holmstrom of Finland for their contributions to improving the design of contracts, the deals that bind together employers and their workers, or companies and their customers.

The Royal Swedish Academy of Sciences said on Monday: “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.”

Dr Hart, a professor at Harvard, and Dr Holmstrom, a professor at the Massachusetts Institute of Technology, have sought to determine how contracts can encourage mutually beneficial behavior, the academy said.

Their work has helped to shape the way companies pay senior executives and when governments decide to hire private companies to provide public services, the academy added.

Dr Holmstrom’s work has focused on employment contracts, while Dr Hart’s work has focused on related issues. Last year, Nobel Prize for economics was awarded to Angus Deaton for his analysis of consumption, poverty and welfare.

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