Massachusetts Institute: Contract Theory and Harvard University

massachusetts institute: British-born Oliver Hart of Harvard University and Finnish economist Bengt Holmstrom of the Massachusetts Institute of Technology Finland will share the 8 million kronor award for their contributions to contract theory, according to The Toronto Star. That a field of research that deals with incentives and risks involved in contracts drawn up between companies and employees, banks and lenders or insurance agents and their customers. By Karl Ritter The Associated Press Mon., Oct. 10, 2016 STOCKHOLM—Two U.S.-based professors won the Nobel prize in economics on Monday for studying how to best design contracts, work that sheds light on when it makes sense to give a CEO a bonus or privatize public services like schools, hospitals and prisons. In research in the 1970s, '80s and '90s, Hart and Holmstrom created new theoretical tools that shed light on how contracts help people and companies deal with conflicting interests and the potential pitfalls that occur when contracts are poorly designed, the Royal Swedish Academy of Sciences said. We don't want to reward them for things that they were not responsible for. These kinds of insights into how we should design contracts are very important because we don't want to give the wrong incentives to people, said Nobel committee member Tomas Sjostrom. (news.financializer.com). As reported in the news.