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Economists win Nobel for contract theory | Economists win Nobel for contract theory |
(35 minutes later) | |
UK-born Oliver Hart and Bengt Holmstrom of Finland have won the Nobel Economics Prize for work on contract theory. | UK-born Oliver Hart and Bengt Holmstrom of Finland have won the Nobel Economics Prize for work on contract theory. |
Judges said their work laid "an intellectual foundation" for policies in areas such as bankruptcy legislation and political constitutions. | Judges said their work laid "an intellectual foundation" for policies in areas such as bankruptcy legislation and political constitutions. |
The pair will receive 8 million Swedish kroner (£744,652) from the committee. | The pair will receive 8 million Swedish kroner (£744,652) from the committee. |
It comes after Nobel prizes for physiology or medicine, physics, chemistry and peace were awarded last week. | It comes after Nobel prizes for physiology or medicine, physics, chemistry and peace were awarded last week. |
The Royal Swedish Academy of Sciences said that Mr Hart and Mr Holmstrom's work was "valuable to the understanding of real-life contracts and institutions". | |
It also said it could identify "potential pitfalls in contract design." | |
For example, contract theory can be used to assess performance-based pay for top executives, the academy said. | |
Mr Hart, born in 1948, is an economics professor at Harvard University in the US, while Mr Holmstrom is a professor of economics and management at Massachusetts Institute of Technology. | |
The pair saw off competition from the World Bank's new chief economist Paul Romer, who was tipped to win. |