Why contract theory won the Nobel economics prize
The prize for economics goes to two men who have helped reduce risk in contract design.
Honours: a Nobel medal. Photo: Pe3k / Shutterstock.com
Harvard’s Oliver Hart and Bengt Holmström from the Massachusetts Institute of Technology have won the Nobel Prize for economics for their research into contract theory. Their contributions have helped our understanding of the often conflicting incentives that operate in the contracts that enable cooperation between individuals, between employers and their workers, between governments, and which affect all of our lives.
The Royal Swedish Academy of Sciences, which decides the winners of the economics prize, said the pair had developed "a comprehensive framework for analysing many diverse issues in contractual design, like performance-b
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