MIT, Harvard professors share Nobel Prize in Economics for contract theory

STOCKHOLM, Sweden, Oct. 10 (UPI) -- Oliver Hart of Harvard University and Bengt Holmstrom of MIT will share the Nobel Prize in Economics, the Royal Swedish Academy announced Monday.

Hart, 68, and Holmstrom, 67, specialize in contract theory, determining how a worker/employer or customer/company contract can best be mutually beneficial, avoiding conflicts and negative consequences.

Much of their work was completed by the 1990s, but the Royal Swedish Academy, in a statement noted, "Through their initial contributions, Hart and Holmström launched 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."

Hart was born in London, and received his Ph.D. from Princeton University. Holmstrom received his from Stanford University, and was born in Helsinki. The awards will be present at a ceremony in Stockholm on Dec. 10