The Nobel prize in Economics on contract – Komsomolskaya Pravda

Stockholm announced two winners of the “Nobel prize” in Economics. Tandem scientists Oliver HART (Britain) and Bengt Holmstrom (Finland) for more than 40 years develops the theory of contracts.

- It examines any sharing of liabilities, subject to any dishonesty. The goal of the theory is to find out the possibility of foul behavior and to formulate the conditions of the contract, which minimize it, – explains Maxim Storchevoy, senior lecturer, graduate school of management St. Petersburg state University.

for Example, Holmstrom found out that you can make company when employee performance is difficult to assess. And how to reduce shirking. And HART engaged long-term investment contracts, which are very difficult to prescribe in advance the conditions, because the future is unpredictable. Scientist figured out how to protect investors. In fact, and in another case the aim is to increase the efficiency of contracts. So the staff had more incentive to roll up.

- For complex contracts that are concluded with the head of the high-level measurement result is a very time consuming process, but possible more elegant solution. For example, the Minister of health should be treated in an ordinary clinic, then he will have the maximum interest in order to make this clinic better – offers Storchevoy.

For their study, the economists, HART and Holmstrom will get a million dollars. The prize for Economics, as we know, it doesn’t the Nobel Committee and Swedish Central Bank.