British-American, Finnish scholars win Nobel economics prize

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STOCKHOLM. KAZINFORM - British-born American Oliver Hart of Harvard University and Finnish-born Bengt Holmstrom of Massachusetts Institute of Technology won this year's Nobel Memorial Prize in Economics for their contributions to "contract theory," the Royal Swedish Academy of Sciences said Monday, Kyodo reports.

The prize -- officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel -- was awarded to the two scholars for their work on the theory that helps to explain various issues in the designing of contracts such as performance-based pay for top executives.

The academy said in a statement the theory developed by the two economists is "valuable to the understanding of real-life contracts and institutions, as well as potential pitfalls in contract design."

"Their analysis of optimal contractual arrangements lays an intellectual foundation for designing policies and institutions in many areas, from bankruptcy legislation to political constitutions," it also said.

The prize money of 8 million Swedish kronor ($924,000) will be divided equally among the two laureates. An award ceremony will be held in Stockholm on Dec. 10.

Unlike the five other Nobel prizes launched by Swedish industrialist Alfred Nobel, the economics prize was established in 1968 by Sweden's central bank in conjunction with its 300th anniversary as a memorial to Nobel.

Source: Kyodo

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