Nobel prize winner for economics 2016 Oliver Hart and Bengt Holmström for his contribution to the theory of contracts.

The Nobel prize for economics 2016 was awarded to the economists, Oliver Hart of the university of Harvard and Bengt Holmström Mit "for their contribution to the contract theory". It has announced l'the Royal Academy of Sciences of Sweden. The recognition, equal to 8 million Swedish kronor (about 830mila euros), is awarded by the Sveriges Riksbank. "The new theoretical tools that were created by Hart and Holmström are valuable to understand the agreements that hold together the modern economies and the functioning of institutions, as well as the potential for traps in the design of the contracts," reads the press release of the Academy.

The two economists have developed a theory of contracts that allows for example to analyze the operation of the performance-related pay to the top manager, the deductibles and the portion borne by the insured in the contracts with insurance companies and privatisation government activities. The analysis of the contractual agreements optimum lays the foundation for the definition of policies in different areas, from legislation regulating the failures up to the total system of the constitutions Member.

Holmström, in particular, "he has shown how a "main" (for example, shareholder a company should design an optimal contract for his "agent" (for example,managing director), whose action can not be controlled in detail." His "principle of informativeness" sets out how the contract should tie the salary to the relevant information, to determine its performance, weighing risks and incentives. After the economist has developed the results by taking into account for example also the possibility that the employees can be rewarded with the promotions, and that some of the members of a team can do, "free-riding", that is, exploit the labor of others without having about.

Hart has provided from singing his "fundamental contributions to a new branch of the theory of contracts which are to do with the case of the incomplete contracts: because it is impossible for a contract to specify every eventuality, this strand deals with the optimal allocation of control rights: which party has the right to take decisions and in what circumstances?". This "has thrown new light on the ownership and control of companies and has had a wide impact on various fields of the economy, as well as on the political science, and to the right".

The Hart research has provided new theoretical tools for the study of issues such as what types of companies should perform a fusion, what is the right mix between debt and equity financing, and when institutions such as schools or prisons should be public or private.