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October 3: Physiology or Medicine
October 4: Physics
October 5: Chemistry
October 7: Peace
October 10: Economic Sciences
Press Release: The Prize in Economic Sciences 2016
10 October 2016
The Royal Swedish Academy of Sciences has decided to award the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2016 to
Oliver Hart
Harvard University, Cambridge, MA, USA
and
Bengt Holmström
Massachusetts Institute of Technology, Cambridge, MA, USA
“for their contributions to contract theory”
The long and the short of contracts
Modern economies are held together by innumerable contracts. The new theoretical tools created by Hart and Holmström are valuable to the understanding of real-life contracts and institutions, as well as potential pitfalls in contract design.
Society’s many contractual relationships include those between shareholders and top executive management, an insurance company and car owners, or a public authority and its suppliers. As such relationships typically entail conflicts of interest, contracts must be properly designed to ensure that the parties take mutually beneficial decisions. 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.
"The Prize in Economic Sciences 2016 - Press Release". Nobelprize.org. Nobel Media AB 2014. Web. 10 Oct 2016
< http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2016/press.html >
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