The two prof Hart and Holmstroem the Nobel prize for Economics – Corriere della Sera

The forty-eighth Nobel prize for economics was awarded to economists of the “two H’s”: two professors who teach in the United States, Oliver Hart of Harvard university, and Bengt Holmstroem at the Mit in Boston, the Massachusetts Institute of Technology. The recognition goes to their contribution to “the theory of contracts”, a branch of the economic analysis of law that studies how the rules governing the contract lead to an efficient allocation of resources. Covering issues such as insurance, home ownership, work, but also the bonus of the managing directors or of the insurance policies. Turn on a light on how the contracts help people deal with conflicting interests.

Oliver Hart

Traps

Beng Ceremony

The Royal Swedish Academy of Sciences argues that these studies, Hart and Holmstroem are important and valued “to understand the contracts of the real and of the institutions, as well as the potential traps in the drafting of contracts”. The work of Hart and Holmstroem, explains the Academy, also relate to “the bankruptcy legislation and the political constitutions”. Hart and Holmstroem are both professors in the university of Cambridge, Cambridge, Massachusetts, and almost the same age. The first is 68 years old, was born in London, is an american citizen. The second age 67, is a national Finnish and was also on the board of directors of Nokia. Has been attributed to the “theorem of Holmstroem” that in a nutshell, the wedding complex, if not impossible, among the incentives to the supermanager (“agents”) and the balanced budget, maintaining the conditions of equilibrium and equity between all the parties in the game, consumers, and shareholders, including (system paretiano and in the Nash equilibrium).

The salary of the “ceo”

Holmstroem, commenting on the award in the hot, in Stockholm, said he was “very lucky” and “grateful” for the award of the Nobel prize. Already in the '70s, showed him as a private person, for example, the shareholder of a society, should draw up an optimal contract for a representative of a group, for example, a chief executive officer. According to his “principle of information”, the contract should, for example, connect the salary of the supermanager to information relevant to its results, weighing carefully the risks and incentives.

Schools and prisons: public or private?

Hart – that the news received at 4 and a half hours in the morning, reported the chronicle, has lost the English aplomb, jumped down from the bed, ran to embrace his wife and to wake up the younger son – has made important contributions to a new branch of the theory of contracts already in the mid – '80s. His findings about “incomplete contracts”, stressed the Academy, shed new light on the ownership and control of enterprises. “Its research — it motivates — provides us with the theoretical tools to study issues such as what types of companies should be merged, just the right mix of debt and equity capital, and institutions – such as schools or prisons – should be subject to public instead of private.” “I woke up at about 4.40 and I was wondering if now you were making it too late for this year, – has told the professor to reporters – but then luckily the phone rang”.

the value of The prize

The two researchers will share the prize worth 8 million kronor, approximately 930 thousand u.s. dollars (and 830 thousand euro). The winners for them to retire on 10 October in memory of the death of the founder of the prize, Alfred Nobel, in 1896. The choice of the Swedish Academy has displaced all of the predictions of the vigil. Among the papabili, there was the French Olivier Blanchard, had been done in the name of Edward Lazear, and Marc Melitz. Instead, with the stroke of a scene in the Academy award-winning Hart and Holmstroem: two of them are that you add to the list of Nobel prize of Economy, after the scottese Angus Deaton, an award last year.

October 10, 2016 (amendment 10 October 2016 | 13:59)

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